Provision for impairment exceeded 2.7 billion yuan, China Resources Beer "foots the bill" for billion-yuan baijiu acquisition, net profit declined nearly 30% last year

This article is from Times Finance, authored by Lin Xinlin.

The beer giant pays the price for its bold claim to “turn white.”

Image source: Pexels

On the evening of March 10, China Resources Beer (00291.HK), a leading domestic beer company, issued a profit warning, stating that for the fiscal year ending December 31, 2025, it may record a profit of approximately 2.92 billion to 3.35 billion yuan, compared to 4.759 billion yuan in the same period last year, representing a decrease of about 29.6% to 38.6% year-on-year.

This is uncommon in China Resources Beer’s development history. According to Times Finance, the company’s profit in 2025 may hit a five-year low.

Such a significant decline in profit is due to a one-time large impairment loss. China Resources Beer disclosed in its announcement that the profit reduction was mainly due to goodwill impairment of about 2.79 billion to 2.97 billion yuan, which was recognized after acquiring a 55.19% stake in Guizhou Jinsha Jiaojiu Distillery Co., Ltd. (“Jinsha Jiuye”) on January 10, 2023.

While competing fiercely in the high-end segment against Budweiser and Carlsberg, the company is still weighed down by its liquor business. After a leadership change last year, China’s leading beer company has begun to address the “hidden risks” laid in earlier years.

Post-billion-dollar acquisition, goodwill impairment increases

A large impairment has brought the once sensational billion-yuan liquor acquisition back into the public eye.

On January 10, 2023, China Resources Beer completed the transfer of its 55.19% stake in Jinsha Jiuye, officially becoming its controlling shareholder. From announcement to completion, the acquisition took just over two months, making it the largest M&A deal in the liquor industry to date.

Through this acquisition, China Resources Beer proposed a “beer + liquor” strategy, aiming to leverage its strong beer distribution channels to empower its liquor business. Additionally, liquor companies tend to have higher profit margins, which can boost China Resources Beer’s overall profitability and optimize its business structure. According to the 2024 financial report, Jinsha Jiuye’s gross profit margin reached 68.5%, compared to around 40% in the beer industry.

Before the acquisition, Jinsha Jiuye, known as a “dark horse” in sauce-flavor liquor, showed promising performance. China Resources Beer disclosed that in 2021 and the first half of 2022, Jinsha Jiuye’s revenue was 3.641 billion and 2.001 billion yuan, respectively, with net profits of 1.315 billion and 670 million yuan.

Such a strong foundation once fueled expectations for this cross-industry integration.

However, the gap between expectations and reality quickly appeared. Due to different channel layouts and strategies between beer and liquor, coupled with a cooling trend in the liquor industry over the past two years, Jinsha Jiuye, especially its high-end brand “Summary Liquor,” faces inventory clearance and price inversion issues.

According to Times Finance’s review of China Resources Beer’s recent financial reports, the company’s liquor business has shown no significant improvement. In 2023-2024, its liquor segment achieved revenues of 2.067 billion and 2.149 billion yuan, with EBIT (earnings before interest and taxes) of 130 million and 121 million yuan. In the first half of 2025, revenue was 781 million yuan, down 34% year-on-year, with an EBIT loss of 152 million yuan.

It’s noteworthy that China Resources Beer’s liquor business is mainly contributed by Jinsha Jiuye. Due to continued poor performance, the company made a goodwill impairment provision of 2.79 billion to 2.97 billion yuan in 2025.

China Resources Beer stated in its announcement that the impairment of Jinsha Jiuye’s goodwill was mainly due to weak demand in the liquor market and shrinking consumption scenarios, leading to reduced consumer spending. Goodwill impairment refers to the excess premium paid during an acquisition, which needs to be written down when the future profitability of the target significantly declines.

“Essentially, it’s a correction of the overly high valuation in past acquisitions, clearing risks through a one-time impairment,” said an industry insider who wished to remain anonymous.

Meanwhile, since China Resources Beer took control, Jinsha Jiuye’s management has undergone multiple changes, with three chairmen and two CEOs replaced within two years.

Failed liquor expansion, Jinxuzi also losses

This large impairment effectively clears the valuation and operational risks associated with the billion-yuan acquisition, marking a possible strategic contraction and adjustment in Hou Xiaohai’s white liquor expansion route.

On June 27, 2025, Hou Xiaohai resigned as executive director and chairman; on September 3, the company’s former president Zhao Chunwu was appointed chairman of China Resources Beer, officially entering Zhao’s leadership era.

For Zhao Chunwu, besides leading the company through the current complex market environment, he also faces the legacy of Hou Xiaohai’s white liquor layout, which has been sluggish and underwhelming.

Industry insiders believe that this move to clear the historical baggage of liquor acquisitions at once can lower future performance baselines and pave the way for subsequent growth—“all negative news has been cleared in one go.”

However, for Zhao Chunwu, the successor, the burdens are not limited to Jinsha Jiuye.

Under Hou Xiaohai’s leadership, China Resources Beer began aggressively entering the white liquor sector from 2020, acquiring a 55.19% stake in Jinsha Jiuye, as well as a 40% stake in Shandong Jingzhi White Liquor Co., Ltd. for 1.3 billion yuan, and indirectly holding 13.28% of Jinzenshi Group (600199.SH) through strategic investments, making it the second-largest shareholder and covering the “sauce,” “fuyu,” and “zhi” aroma types.

Jinzenshi is one of Anhui’s “Four Golden Flowers” of white liquor. In recent years, its performance has also been somewhat sluggish, with losses for three consecutive years from 2022 to 2024. In January, Jinzenshi released a profit warning, expecting a net loss attributable to shareholders in 2025; the third-quarter report showed revenue of 628 million yuan, down 22.08% year-on-year, with a net loss of 100 million yuan, down 0.97%.

The situation of Jingzhi Jiuye is even more delicate. As the starting point of China Resources Beer’s white liquor venture, Jingzhi Jiuye’s national expansion has been weak, and it still mainly operates in Shandong.

According to information disclosed by Jinshiyuan at the end of 2019, Jingzhi Jiuye’s 2018 revenue was 1.248 billion yuan, with a net profit of 6.275 million yuan; however, since China Resources Beer’s investment in 2021, no specific data has been disclosed.

How to truly coordinate the beer and liquor businesses and break through the integration challenges will be the most pressing issue for Zhao Chunwu’s leadership.