Liquor impairment of 2.8 billion yuan, beer profit of 9.6 billion yuan: When will China Resources Beer achieve 'Dual Empowerment in Beer and Liquor'?

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On March 23, China Resources Beer (0291.HK) announced its 2025 financial results, reporting a full-year consolidated revenue of 37.985 billion yuan, a year-on-year decrease of 1.68%; net profit attributable to shareholders was 3.371 billion yuan, a year-on-year decrease of 28.87%.

However, excluding special items, the net profit attributable to shareholders of China Resources Beer was 5.724 billion yuan, an increase of 19.6% year-on-year. According to the investment cooperation agreement signed in January 2021 between Shenzhen Runtou and China Resources Snowflake Investment, as well as the relocation compensation agreement among Shenzhen Runtou, China Resources Snowflake Investment, and China Resources Snowflake Beer (China) Co., Ltd., an indirectly wholly-owned subsidiary of China Resources Beer, China Resources Beer recognized revenue of approximately 1.005 billion yuan in 2025. Meanwhile, based on the comprehensive liquor market environment and the actual operating conditions of its liquor business in 2025, China Resources Beer recorded an impairment provision of 2.877 billion yuan for units generating cash flow from the liquor business. Additionally, China Resources Beer recognized fixed asset impairment and one-time employee compensation and resettlement expenses of approximately 306 million yuan resulting from capacity optimization.

Clearly, the goodwill impairment related to the liquor business affected China Resources Beer's profit performance in 2025. Going forward, how will China Resources Beer promote the coordinated development of its beer and liquor businesses?

Profit growth in the beer sector

In 2025, China Resources Beer achieved a beer sales volume of approximately 11.03 million kiloliters, representing a year-on-year increase of 1.4%. Among this, the sales volume of mid-to-high-end and above beers grew by mid-to-high single digits year-on-year, accounting for nearly 25% of total sales; the sales volume of premium and above beers increased by nearly 10 percentage points year-on-year.

In 2025, the revenue from China Resources Beer's beer business was 36.489 billion yuan, which remained basically flat compared to 2024. However, benefiting from its premiumization strategy, its gross profit margin increased from 41.1% in 2024 to 42.5%.However, in terms of growth rate, the growth of China Resources Beer's beer business has slowed down. From 2022 to 2024, the revenue growth rates of its beer business were 5.6%, 4.5%, and -1%, respectively.

This is mainly due to the impact of the beer industry. In this announcement, China Resources Beer mentioned a market environment characterized by a decline in the total volume of the beer industry and intensified competition. According to data from the National Bureau of Statistics, in 2025, the cumulative beer production of large-scale enterprises nationwide was 35.36 million kiloliters, a year-on-year decrease of 1.1%. According to 'Trends and Outlook of China's Beer Industry Development', in the first three quarters of 2025, the national beer production reached 30.9525 million kiloliters, a year-on-year increase of 3.74%; the sales revenue reached 151.748 billion yuan, a year-on-year increase of 0.82%; the total profit amounted to 28.436 billion yuan, a year-on-year increase of 17.93%.

The China Alcoholic Drinks Association pointed out that the production and sales volume of the top five companies in the industry already accounted for more than 84%, with their revenue and profit shares continuing to rise. This means that the growth dividends of the industry are increasingly flowing deterministically towards leading companies that can successfully implement premiumization and efficiency strategies.

From a financial data perspective, under the slowdown of revenue growth, premiumization brought higher profit growth to China Resources Beer. After excluding gains recognized from investment relocation agreements, fixed asset impairments resulting from capacity optimization, and one-time employee compensation and resettlement expenses, the EBITDA of its beer business in 2025 was 9.611 billion yuan, representing a year-on-year increase of 17.4%.

Zhao Chunwu, Chairman of the Board of China Resources Beer, noted at the 2025 earnings briefing that the premiumization trend of domestic beer has not changed. Looking at the performance of various listed beer companies, the revenue from high-end products did not decline, but premiumization is entering the second half. From the perspective of product structure stratification, it is shifting from the traditional pyramid structure moving from low to high to balanced development.

At the same time, he stated that beer premiumization has entered the second half, where beer demand, scenarios, and channels are changing. Particularly, the rise of new consumer groups has driven an increasing demand for craft beer, health-oriented beer, and personalized beer. On the other hand, the emergence of new channels such as draft beer stations and beer trading platforms has also brought entirely new increments, and these new scenarios and channels are unprecedented in the industry.

China Resources Beer continues to strategically optimize its production capacity while expanding into new products and channels. During 2025, it ceased operations at four breweries, while a smart craft brewery located in Shenzhen began operations. By the end of 2025, China Resources Beer operated 59 breweries across 25 provinces, municipalities, and autonomous regions in mainland China, with an annual production capacity of approximately 19.1 million kiloliters.

In terms of new products, China Resources Beer plans to independently develop Belgian-style wheat and dark beers by 2025. It will also launch new categories such as tea-infused beer and fruit beer, while simultaneously releasing four tea-flavored lagers. Additionally, it will introduce health-concept products like Zhang Zhongjing medicinal beer and oyster peptide beer. In terms of new consumption channels, the company has reached strategic cooperation with key online platforms such as Alibaba, Meituan Flash Purchase, JD.com, Ele.me, Waima Liquor Delivery, and Jiuxia'er. During the '14th Five-Year Plan' period, it cumulatively developed 15 e-commerce exclusive custom products.

In its announcement, China Resources Beer stated that looking ahead to the '15th Five-Year Plan,' it will focus on 'steady growth and opening a new chapter' as its guiding principle and advance development around three key objectives.The first objective is to prioritize mid-to-high-end beer products, vigorously developing sub-premium segments to continuously solidify its position in the high-end market; the second is to focus on innovative products, actively responding to and meeting consumer demands through personalized and diversified product innovation; the third is to use the Greater Bay Area as a new growth engine, aligning with China's economic and demographic trends to cultivate new growth regions.

Significant goodwill impairment in the baijiu business

While the beer segment remains stable, the baijiu business continues to be a drag for China Resources Beer.

In 2025, China Resources Beer’s baijiu business generated revenue of 1.496 billion yuan, a year-on-year decrease of 30.39%. Excluding goodwill impairment, its earnings before interest, taxes, depreciation, and amortization (EBITDA) were 264 million yuan, down 68.83% year-on-year.

China Resources Beer stated that in 2025, the company promoted business development through various measures, including formulating region-specific differentiation strategies and category management; focusing on the development of core products in the Abstract and Jinsha series; maintaining price positioning and implementing digital goods tracking management; pursuing an omnichannel strategy; strengthening consumer engagement; and expanding synergies and innovations in beer-baijiu dual empowerment, e-commerce, and instant retail businesses.

At the 2025 earnings briefing, Zhao Chunwu stated that the 2025 impairment of the baijiu business fully considered macroeconomic conditions, industry cycles, and consumer recovery factors. The Chinese beer market has entered a period of volatility and adjustment, and for China Resources Beer to sustain growth, it must create a second growth curve.

In its earnings report, China Resources Beer noted that overall, the company will further consolidate its core beer business and build diverse growth drivers. Meanwhile, the baijiu business is positioned as the second growth curve, with a focus on promoting brand differentiation, innovating sales models, stabilizing pricing systems, building stronghold markets, and vigorously developing high-quality distributors.

Regarding the next steps for the baijiu business, Jin Hanquan, President of China Resources Beer in charge of the baijiu division, stated that efforts will focus on stabilizing the brand, maintaining price levels, and securing distribution channels.

In terms of branding, Jinsha Liquor is implementing a dual-brand strategy with 'Abstract' and 'Jinsha.' Among these, Abstract is positioned as a high-end sauce-aroma brand, focusing on premium business and cultural marketing; the Jinsha Huisha series targets the mass market for cultivation, investing resources to develop more marketable products.

Regarding price management, a unified national approach has been adopted, significantly reducing the likelihood of parallel importing and reselling. Internally, every bottle is traceable to ensure accountability across regions and distribution channels, with a dedicated supervisory team strictly controlling product flows and preventing low-price parallel imports. On the channel front, the previous bare-price rebate model has been entirely abandoned, with profit-sharing now implemented between retailers and distributors.

Meanwhile, China Resources Beer has established a dedicated sales organization to advance the 'Beer and Baijiu Dual Empowerment' strategy, currently reviewing clients’ baijiu operations to provide tailored product offerings.

For China Resources Beer, profit growth in the beer segment reflects the success of its premiumization strategy. However, goodwill impairment in the baijiu business has weighed on overall performance, though the company remains committed to positioning baijiu as its second growth curve. Unlocking the synergies of 'Beer and Baijiu Dual Empowerment' and driving revenue and net profit growth in the baijiu segment will be key to achieving a new phase of expansion for China Resources Beer.

Author | Wu Ren

Source | Zhengtan Finance (ID: teccj6)

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