Net profit drops by 35.5%! Baoyi Shede Liquor Industry falls into its darkest hour

Ask AI · Why did Shad e Liquor’s performance rise then fall after Fosun took control?

The liquor industry is currently going through a new cycle.

The development trajectory of liquor companies also varies widely.

On the very last day of 2020, Shad e Liquor welcomed a “white-clad knight.”

At that time, Shad e Liquor—then mired in operating difficulties due to violations by its former controlling shareholder, Tianyang Holdings, involving the misappropriation of funds—was acquired by Yuyuan Stock under Fosun Group for 4.53 billion yuan, purchasing 70% of the equity of Sichuan Tuopai Shad e Group, and was officially brought into the “Fosun ecosystem.” This equity acquisition was widely regarded as an important layout by Guo Guangchang in the liquor sector. Fosun publicly stated at the time that it did not pursue short-term returns from Shad e Liquor, but instead valued the company’s long-term healthy and stable development, committing to building it into a high-quality brand with sustainable operations.

After Fosun took control of Shad e Liquor, both sides went through a brief period of mutually beneficial cooperation. With Fosun’s brand backing and support from channel resources, Shad e Liquor vigorously advanced its “old liquor strategy,” and performance surged rapidly. In 2021, Shad e Liquor achieved operating revenue of 4.969 billion yuan, up 83.80% year on year, and realized net profit attributable to shareholders of 1.246 billion yuan, a substantial increase of 114.35% year on year, reaching an all-time high. Meanwhile, Shad e Liquor’s stock price also rose in tandem, and its market value once surpassed the 80 billion yuan mark.

However, with the industry cycle adjusting, the true quality of company operations gradually became evident. In just a little more than five years—after a period of favorable development—Shad e Liquor, which had once looked set for growth, now finds itself under rather severe operating pressure.

Taking a longer view of the cycle, Shad e Liquor’s performance has declined clearly over the past two years: in 2024, net profit fell to only 346 million yuan, down 80.46% from the same period the previous year; entering 2025, net profit further dropped to 223 million yuan, down 35.51% year on year. Although the rate of decline narrowed compared with 2024, it had already fallen by more than 80% from the high point in 2021. The capital market’s performance has been even more apparent: Shad e Liquor’s total market value is currently hovering around 15 billion yuan, down more than 70 billion yuan from its peak.

From an industry-quality enterprise that delivered rapid performance growth to a company where net profit has fallen sharply and the share price has continued to adjust—why has the equity cooperation between Fosun and Shad e Liquor undergone such a clear change in just a few short years? After facing operating pressure, how should Shad e Liquor break through and turn things around?

Difficult Adjustment

“Spend one year to overdraw industry dividends, then spend three years gradually digesting and working through the adjustments.”

This line summarizes the core reason behind the ups and downs in Shad e Liquor’s operations over the past four years.

In 2021, Shad e Liquor’s performance surged dramatically, with revenue and net profit increasing by 83.8% and 114.35%, respectively. On the surface, this was the result of channel confidence being restored and resource synergies after Fosun took over; but at a deeper level, behind the strong performance also lay an overdrawn future development space for Shad e Liquor.

At its core, what Fosun brought to Shad e Liquor was not only capital backing and management support, but also a boost to market confidence: relying on Fosun’s resource support, channel confidence recovered quickly, distributors’ willingness to remit payments increased, the pace of market distribution accelerated, and performance rose accordingly. However, this growth model has inherent limitations: channel carrying capacity is limited, and the rate at which the terminal market digests inventory remains relatively stable. When the quantity shipped to channels exceeds actual market demand, performance growth is likely to come at the expense of future space.

Industry views hold that Shad e Liquor’s rapid performance growth in 2021 had more of a phased “repair” character. After the earlier issue of Tianyang Holdings’ misappropriation of funds was resolved, channel confidence rebounded with a restorative effect. Essentially, this growth was making up for earlier operational gaps rather than creating a new, sustained growth engine. More importantly, to maintain the growth momentum, Shad e Liquor continued to increase market spending in subsequent years: in 2023, sales expenses reached 1.293 billion yuan, while in 2020 this figure was only 536.8 million yuan.

There is no denying that such spending can boost operations in the short term, but it also increases operating costs and sets the stage for a subsequent decline in profitability.

Now, as the overdrawn effects from earlier periods gradually show up, together with changes in the industry environment, the company has entered an operational adjustment stage.

First is the obvious decline in net profit. According to financial reports, in 2024 Shad e Liquor achieved net profit of 345.8 million yuan, down 80.46% from 1.769 billion yuan in 2023, falling back to around the 2018 level. Entering 2025, Shad e Liquor’s net profit further decreased to 223 million yuan, down 35.51% year on year. Although the decline narrowed compared with 2024, compared with the 17.69 billion yuan peak in 2023, it has already fallen by more than 80%.

In addition to the drop in profitability, this adjustment is also reflected in optimization at the channel level.

Financial data shows that in 2025, Shad e Liquor’s revenue from its traditional wholesale and agency channels was 3.249 billion yuan, down 25.19% year on year. Meanwhile, Shad e Liquor’s number of distributors was optimized: it added 378 new distributors during the year and exited 516, resulting in a net reduction of 138. As for contract liabilities that reflect distributors’ willingness to stock up, Shad e Liquor’s contract liabilities in 2025 were 146.7 million yuan, down 11% from 2024, and down by as much as 80% compared with the 6.582 billion yuan peak in 2021.

Additionally, even more prominent is the structural adjustment in the product mix.

In 2025, Shad e Liquor’s revenue from mid-to-high-end liquor was 3.120 billion yuan, down 23.83% year on year, while revenue from ordinary liquor was 733 million yuan, up 5.75% year on year. With the decline in mid-to-high-end product revenue and the rise in mass-market product revenue, this indicates that, against a backdrop of a more rational consumption market, the market acceptance of Shad e Liquor’s core products related to the “old liquor strategy” has changed, and consumers are more inclined to choose affordable mass-market liquor products. The company’s overall gross profit margin has declined for four consecutive years from the 77.81% high point in 2021, and in 2025 it has fallen to 62.04%.

Can It Bring a Turn?

Judging from the performance shown in the financial reports, it is an objective fact that Shad e Liquor is facing operating pressure.

What is worth paying attention to now is: after two years of adjustment, how long will Shad e Liquor take to return to a track of steady development?

To answer this question, it is necessary to conduct a comprehensive analysis combining Shad e Liquor’s core “old liquor strategy” and the Fosun Group behind it.

First, let’s look at Shad e Liquor’s “old liquor strategy.” The old liquor strategy is the core direction of Shad e Liquor’s operations after Fosun’s entry, and also an important foundation for Shad e Liquor to build differentiation advantages within the liquor industry. According to available information, as of the end of 2025, Shad e Liquor’s reserves of semi-finished liquor (including base liquor) reached 182,000 kiloliters. The high-quality base liquor retention strategy promoted since 1976 has indeed laid a solid foundation for the company’s development.

However, having old liquor reserves is only the foundation. How to carry out the market-oriented operations and realize value conversion of old liquor products is another challenge.

As mentioned earlier, in 2025 Shad e Liquor’s revenue from mid-to-high-end liquor was 3.120 billion yuan, down 23.83% year on year. Behind this figure is the overall pressure on the 300 yuan to 700 yuan sub–high-end price band of Shad e Liquor’s core layout. According to the “2025 China Liquor Market Mid-term Research Report,” products priced from 500 yuan to 800 yuan face relatively high operating pressure; the 800 yuan to 1,500 yuan price segment shows more noticeable price fluctuations in the market. The mainstream consumer price band has moved downward from the previous 300 yuan to 500 yuan range to the 100 yuan to 300 yuan range.

Beyond pressure on mid-to-high-end products, what deserves even more attention is that competition in the old liquor segment is intensifying.

According to industry information, currently more and more companies continue to expand into the fields of old liquor and vintage liquor. Yanghe Co., Ltd. has substantial-scale storage of base liquor in clay jars and has simultaneously launched products related to vintage liquor. Leading companies such as Moutai and Wuliangye also have their own vintage liquor series. When industry leaders all rush to lay out the old liquor segment, Shad e Liquor’s differentiation advantage in its old liquor strategy faces tests. However, in its 2026 strategic plan, Shad e Liquor still places the “old liquor strategy” at the core foundation position.

Next, let’s look at the Fosun Group behind it. According to statistics, over the past five years, Shad e Liquor’s core management team has seen many personnel adjustments, involving more than 20 person-times. Just in the chairman position, there were three replacements within two years: Zhang Shuping stepped down in December 2022, Ni Qiang took over in January 2023, and in December of the same year Pu Jizhou was promoted to chairman. The most recent adjustment occurred in March 2026, when Vice President Wang Yong applied to resign due to work arrangements; this was only about half a year before the end of his originally planned term, which was September 20, 2026.

In fact, the frequent adjustments to Shad e Liquor’s management team also reflect a certain degree of volatility at the level of strategic execution. For the liquor industry, stability of the core management team is crucial. Expansion of the liquor market depends heavily on stable cooperation relationships between the core team and distributors. Each management change can affect channel operations. Some distributors have said that frequent leadership changes can lead to insufficient continuity in business strategies, and that the implementation of some earlier plans remains uncertain.

Taken together, Shad e Liquor is facing multiple operational challenges: at the financial level, net profit has fallen sharply, contract liabilities have declined, and inventory remains at a high level; at the business level, competition in the old liquor segment is intensifying while management team stability still needs improvement. In the current environment of increasingly intense competition in the liquor industry, to get out of the operating low point, Shad e Liquor still faces many challenges. Since the company is currently in an adjustment phase, returning to a steady and healthy development trajectory will still take some time.

Author’s Statement: Personal views are for reference only