China Resources Writes Down Sands by 2.877 Billion Yuan, a Financial Revaluation After the M&A Retreat

Question: How will the audit background of the new management team affect the company’s strategy?

Original | Flowing Business Author | Li Wei

China Resources Beer has delivered a rather dramatic earnings report.

On March 23, this leading beer company announced its full-year 2025 results. The company’s total revenue was 37.985 billion yuan, down 1.68% year-over-year; net profit attributable to shareholders was 3.371 billion yuan, a significant decline from 4.739 billion yuan last year. The most striking figure on the report is a goodwill impairment of 2.877 billion yuan.

All impairment came from the Baijiu business segment, more specifically from the company’s controlled subsidiary, Jinsha Liquor. This nearly rewrites the entire profit statement for the year.

But if you remove this impairment, the story is completely different. The company emphasizes that, excluding special items, the pre-tax profit (EBITDA) for 2025 was 9.879 billion yuan, up 9.9% year-over-year; net profit attributable to shareholders was 5.724 billion yuan, up 19.6%.

In other words, the profit collapse is not due to a slowdown in the core beer business, but mainly due to the white liquor acquisition three years ago, which has finally reached a revaluation point financially.

This makes China Resources Beer’s 2025 look like two stories layered together. One story is about beer, where the familiar China Resources narrative continues: stable sales, high-end development, improved gross margins, and efficiency gains. The other story is about Baijiu, which presents a different reality: industry deep adjustments, shrinking consumption scenarios, channel pressures, and the once-promising Jinsha Liquor being forced to cool on the books.

The company performed very generously in shareholder dividends, with total dividends for 2025 reaching 1.021 yuan per share, a significant increase of 34.3% year-over-year, setting a five-year high.

This simultaneous pressure on performance and large dividend payout sends a very clear signal to the capital market: the historical baggage has been shed, and the company’s cash flow remains abundant.

Three Years of Change

Data comparisons often reveal the most authentic business picture. The core beer business revenue remains stable at 36.489 billion yuan, contributing the majority of total revenue. In contrast, the Baijiu segment’s revenue of 1.496 billion yuan appears insignificant, accounting for about 4% of the total. Yet, this seemingly small 4% consumed nearly 2.9 billion yuan in book profits. This extreme asymmetry in financial performance highlights the huge risks hidden in cross-industry mergers and acquisitions.

Looking at profitability specifically: after excluding special items, the pre-tax profit of the beer segment reached 9.611 billion yuan, up 17.4% year-over-year. Meanwhile, the Baijiu segment’s profit, if excluding goodwill impairment, was only 264 million yuan—more than 30 times less. This stark contrast explains why management chose to act decisively.

To understand the necessity of this huge impairment, we need to revisit a business alliance formed just three years ago.

In January 2023, China Resources Beer invested 12.3 billion yuan to acquire a 55.19% stake in Guizhou Jinsha Distillery. This deal set a record for the largest Baijiu M&A in recent years. At that time, the Chinese Baijiu market still had residual warmth, and capital’s enthusiasm for sauce-flavor Baijiu remained high. China Resources Beer was ambitious, aiming to replicate its M&A and integration experience in the beer industry. The management proposed a “dual empowerment” strategy for beer and Baijiu, hoping to leverage its extensive distribution network to boost high-margin Baijiu sales.

However, business reality proved more brutal than logical projections. Over the three years following the acquisition, macroeconomic conditions changed profoundly, and the Baijiu industry entered a long and painful deep adjustment period. High-end and super-high-end Baijiu faced enormous channel destocking pressures.

Jinsha Liquor could not withstand this winter alone; its core premium products faced severe price inversion, and distributor profit margins were squeezed. In 2025, China Resources Beer’s Baijiu revenue fell sharply by over 30% year-over-year. Facing a shrinking market and increasing industry segmentation, the high acquisition premium—initially hundreds of billions—ultimately became a ticking time bomb.

The timing of this bomb’s detonation is highly intriguing. Behind the huge impairment is a change in the core management of China Resources Beer.

Management Change

Over the past decade, the company has been characterized by strong personal heroism. The former Chairman, Hou Xiaohai, was a key figure—serving as CEO from 2016 and leading China Resources Beer’s epic high-end transformation. He spearheaded the acquisition of Heineken China and was the architect of the company’s entry into the Baijiu sector. Hou was aggressive, enthusiastic about large-scale M&A, with the 100-billion-yuan Jinsha Liquor acquisition being one of his major expansion moves.

But in June 2025, 57-year-old Hou Xiaohai suddenly announced his resignation from all positions, including Chairman of the Board. His departure marked the end of China Resources Beer’s rapid growth era; the era of personal heroism was giving way to a new governance era.

After Hou’s departure, the company quickly appointed a new core management team, led by Zhao Chunwu, who has extensive frontline sales and management experience, as Chairman. Jin Hanquan was appointed President and also took on the role of General Manager of China Resources Liquor.

Jin Hanquan’s background is unusual; unlike traditional marketing-oriented executives, he has a strong background in auditing and discipline inspection. Before joining China Resources Beer, he served as a senior auditor in the audit and supervision department of China Resources Group. Having a high-level executive with auditing expertise in charge, and personally overseeing the sensitive Baijiu business, is rare in the fast-moving consumer goods industry driven by sales.

The 2.877 billion yuan goodwill impairment, through a one-time large provision, effectively absorbs the high premiums paid in past acquisitions. The new team has shed the heavy historical baggage, reducing market expectations for high profitability in the Baijiu segment, creating a more flexible performance base for future lighter operations.

The logic is simple: bad news is fully out, and every future growth point will be beyond expectations.

Operational Logic Reconstructed

The 2025 results are better viewed not as a failure but as a recognition of two different business cycles now being reflected in one report. The beer business has entered a mature stage, focusing on structure, efficiency, and cash flow. Baijiu, especially sauce-flavor, still exhibits strong asset pricing and channel volatility characteristics. At its peak, it seemed unstoppable; during downturns, it exposes valuation costs faster than FMCG.

This afternoon, at the Hong Kong earnings presentation, management’s remarks confirmed a return to pragmaticism. The company no longer paints unrealistic grand visions but emphasizes profit preservation and stable cash flow. The new management’s operational focus and business logic have undergone a fundamental restructuring.

Regarding the difficulties in the Baijiu industry, Zhao Chunwu stated that Baijiu, as a second growth curve, has been carefully reassessed, with a limited and diversified foundation. Baijiu indeed faces unprecedented difficulties; the industry’s turbulence is better than switching to yellow wine or wine. It’s important to stabilize prices, avoid excessive inventory buildup, maintain reasonable channel sales, keep prices aligned with competitors, and strengthen differentiation and personalization.

The beer segment remains the undisputed ballast.

The company will continue to enrich its product matrix of Chinese and international brands, focusing on high-end beer development. In 2025, sales of sub-premium and above beers grew by double digits year-to-date, accounting for nearly 25% of total sales, while premium and above beers grew by nearly 10 percentage points annually. Notably, Heineken’s sales increased by nearly 20% despite a high base, and Snow Beer grew by 60%, with Red爵 doubling compared to last year.

Zhao Chunwu expressed cautious optimism about the beer industry. With stable overall volume, there is room for revenue and profit growth. The high-end segment is entering the second half, with the pyramid structure gradually shifting toward a balanced shape. The apex will grow larger, but it will not invert into an upside-down pyramid. As the middle moves upward, the top will expand, and the overall structure will become more balanced.

This aligns with trends observed in Japan, Korea, and Australia. Based on their structural ratios, by around 2030, if China’s beer production remains around 35 million tons without major fluctuations, the total of sub-premium and above beers could exceed 10 million tons.

Zhao Chunwu also mentioned that the new management has reviewed the “14th Five-Year Plan” strategy, noting some gaps. Market value management fell slightly short of expectations, and forecasts for economic growth, consumption upgrades, emerging formats, e-commerce, and new sales scenarios were not entirely accurate. From 2026 to 2030, they plan to reassess, focusing on overall economic development, industry trends, and most importantly, consumer changes.