Can't Even Fosun Save It? She'de Liquor Industry Evaporates 1.5 Billion in Profits Over Two Years! | Annual Report Breakdown

Written by Mi Mei

This is @Girlfriend Finance’s 1563rd original article.

In the winter of Baijiu, Shede Spirits was the first to “catch a cold.”

On March 21, 2026, Shede Spirits, part of the Fosun Group, disclosed its 2025 performance. There were no surprises—both revenue and profit declined again.

Once a dark horse among Sichuan liquors, after reaching a peak in 2023, it is now experiencing an unprecedented “deep squat.”

01

Let’s look at the core data. In 2025, Shede Spirits’ total revenue was 4.419 billion yuan, down 17.51% year-on-year. Mi Mei noticed that this is the second consecutive year of decline—2023 at 7.087 billion, 2024 at 5.357 billion, and 2025 at 4.419 billion, a nearly 40% drop over two years.

By product, in 2025, revenue from mid-to-high-end liquor was 3.12 billion yuan, down 23.83% year-on-year, exceeding the overall revenue decline. This indicates that the company’s most profitable and core business segment is bleeding the fastest.

Regular liquor (mainly Tuopai series) generated 733 million yuan, a 5.75% increase, becoming a bright spot in the financial report.

Regionally, Shede’s out-of-province market revenue was 2.647 billion yuan, down 19.25%; domestic market revenue was 1.206 billion yuan, down 20.19%. Channel-wise, wholesale agency revenue was 3.249 billion yuan, down 25.19%; e-commerce sales grew by 35.46% to 604 million yuan.

It’s clear that there is a mismatch between Shede Spirits’ ideals and reality.

It is well known that “aged liquor” is Shede’s golden sign. But in 2025, this “moat” seems to have become a drag on sales growth.

Although Tuopai stabilized its basic operations, its gross profit margin of 37.92% cannot support the overall profit structure. Meanwhile, the mid-to-high-end liquor with a gross margin of 74.67% is precisely the product that isn’t selling well.

Sales channels are also suffering, with the core channel “losing blood” even more severely, relying only on “side businesses” like e-commerce to cushion the decline. The financial report shows that in 2025, Shede added 378 new distributors, but 516 exited, a net decrease of 138.

02

Now, let’s look at profits.

In 2025, Shede Spirits’ net profit attributable to shareholders was 223 million yuan, down 35.51% year-on-year. In Q1, net profit was 346 million yuan; Q2, 97 million; Q3, 29 million; Q4, a direct loss of 249 million.

Why did profits decline more sharply than revenue? Mi Mei sees two main reasons.

First, on the cost side. Despite a 17.51% revenue decline, sales expenses only decreased by 10.68%, totaling 1.14 billion yuan.

Second, financial costs. In 2025, Shede’s financial expenses were 10.83 million yuan, compared to a negative 26.19 million yuan the previous year.

In 2025, Shede’s net cash flow from operating activities was -523 million yuan, compared to -708 million yuan in 2024. For two consecutive years, the company’s liquor sales not only failed to generate cash but also depleted existing funds.

In the same year, net cash flow from investing activities was -932 million yuan, a 386.2% increase from -192 million yuan the previous year. Not only did it fail to raise money, but it also spent more.

Meanwhile, projects like capacity expansion and wine tourism integration require capital investment.

Where does the money come from? In 2025, Shede’s long-term borrowings increased from 431 million yuan to 774 million yuan, a 79.38% rise; short-term borrowings rose from 711 million yuan to 1.135 billion yuan, up 59.65%. Net cash flow from financing activities was 1.053 billion yuan, a 766.06% increase.

This “borrowing new debt to pay old debt” model is driving up financial costs.

Regarding inventory, Shede’s semi-finished liquor stock increased from 162,000 kiloliters in 2023 to 182,100 kiloliters in 2025. The aging liquor stockpiles are growing, indicating slowing sales.

With sales slowing and inventory piling up, impairment provisions are inevitable. In 2025, Shede’s asset impairment loss was 38.09 million yuan, more than double the 18.73 million yuan in 2024. Inventory write-downs accounted for 12.35 million yuan, intangible asset impairments for 21.39 million yuan.

03

In summary, Mi Mei believes that Shede Spirits faced a very awkward situation in 2025.

On one hand, the aged liquor strategy requires long-term persistence, as it is the most core differentiated asset; on the other hand, the market does not wait, and consumer segmentation is making the sub-premium price band increasingly crowded.

Capacity expansion and wine tourism integration must continue, but cash flow pressure is mounting. Distributors are exiting, channel confidence is waning, and inventories are still rising.

There may only be two paths forward.

First: Lower your stance and adjust the product structure. Since mid-to-high-end liquor isn’t selling well, actively move downmarket. Use Tuopai to capture the mass market, and Shede to create differentiated experiences, rather than stubbornly sticking to the sub-premium price range.

The problem with this approach is that Tuopai’s gross margin is only 37.92%, far below the 74.67% of mid-to-high-end liquor. Moving downmarket would further reduce profit margins, making short-term performance even worse. Will the capital market accept this? That’s uncertain.

Second: Hold on tightly and wait for a consumer rebound. Continue the aged liquor strategy, keep expanding capacity, and push forward with wine tourism integration, using time to gain space. The gamble is that consumers will revalue aged liquor at some future point.

But can the company afford to wait? Two consecutive years of negative cash flow, increasing borrowings—if the recovery is slower than expected, liquidity pressure will intensify rapidly.

Moreover, the number of distributor exits in 2025 is significant. Even if consumption recovers, channel recovery will take time.

Is there a third way? Possibly. It might involve rethinking how to communicate the value of aged liquor—making sure consumers truly perceive its worth, rather than just relying on brand promotion.

At the same time, stabilizing the distributor base, offering channel incentives, clearing inventories, and rebuilding confidence are crucial.

Shede Spirits has high-quality base liquor reserves and the two major brands “Tuopai” and “Shede,” which are all trump cards for future glory.

But even the best cards depend on how they are played. Currently, faced with the patience of capital markets and financial strain, how much time does Shede really have to make its move?

This article is for discussion and analysis only and does not constitute investment advice. All images not specified are from company or regulatory announcements. Thank you for your understanding!

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