The performance driven by beer was dragged down by goodwill impairment in the liquor business related to baijiu. China Resources Beer: Will not spin off its baijiu business.

Ask AI · What are the deeper reasons behind China Resources Beer’s goodwill impairment in its baijiu business?

A large goodwill impairment in the baijiu business dragged down China Resources Beer’s highest attributable net profit since it went public.

Recently, “the beer king,” China Resources Beer, released its 2025 performance report. The data show that the company’s revenue last year was RMB 37.99 billion, down 1.7% year over year, while attributable net profit was RMB 3.37 billion, down 28.9% year over year. According to China Resources Beer’s explanation, the main reason for the sharp drop in attributable net profit was that the company recorded goodwill impairment of RMB 2.88 billion for its baijiu business, as well as impairment for capacity optimization of RMB 310 million. If this impact is excluded, China Resources Beer’s attributable net profit would have grown 19.6% year over year to RMB 5.72 billion—a figure that should have set a new record since China Resources Beer’s listing.

Affected by the earnings disclosure, China Resources Beer’s share price has been quite volatile over the last three trading days. As of March 25 close, the stock price was HKD 25.38 per share, with a cumulative gain of 5.9%. Multiple brokerage institutions maintained a “Buy” rating.

Some 2025 performance data of China Resources Beer. (Screenshot source: the company’s annual report)

According to a reporter from the Nandu Bay Finance and Water & Drink New Consumption Index research group, China Resources Beer’s “beer+baijiu dual empowerment” strategy is facing a double test: the industry cycle and execution at the business level. Judging from signals released by management, the high-end push in the beer business will remain unchanged over the next five years. Although the baijiu business has been declining year by year due to factors such as the consumption environment, and even though goodwill has been recorded with a large impairment, China Resources Beer has no intention whatsoever to divest this business.

Beer fundamentals are improving; management says the high-end trend will remain unchanged

As China Resources Beer’s core business, beer remained relatively strong in 2025.

The annual report shows that in 2025, China Resources Beer achieved sales volume of 11.03 million kiloliters, up 1.4% year over year. High-end positioning remains the main factor driving growth. At the same time, the business’s earnings before interest, taxes, and other items (profit before interest, taxes, and other items) was RMB 7.91B in 2025, compared with RMB 6.5B in 2024, up 21.62%.

As the reporter from Nandu Bay Finance and Water & Drink learned, beer’s high-end upgrade is the main driver of China Resources Beer’s growth, which also helped its product gross margin rise by 0.5 percentage points year over year to 43.1%. In particular, Heineken’s sales grew by about 20% year over year, and Old Snow’s sales grew by roughly 60%.

It is worth noting that the Nandu Bay Finance and Water & Drink reporter also observed that China Resources Beer specifically mentioned the RMB 8 beer price band. The company said that last year, mid-premium beer achieved single-digit growth. It is understood that because beers in the RMB 8 price band have been growing rapidly in the market, China Resources Beer also indicated in the past that it would step up efforts to build and expand within this segment. However, because beer companies such as Yanjing Beer and Zhujiang Beer—represented by—had already laid out in this price band for at least three years or longer, China Resources Beer’s product and brand advantages have not yet been fully activated.

Data from the National Bureau of Statistics show that in 2025, breweries above designated size produced 35.36 million kiloliters of beer in total, down 1.1% year over year. This also reflects that the beer market is in a stage of “expansion vs. contraction” game. But because over the past three years, leading companies that adjusted products toward high-end positioning have seen their growth rates slow down, and even decline year over year, the industry has begun to question whether “beer high-end upgrading has already run its course.”

At the earnings briefing, China Resources Beer’s board chairman, Zhao Chunwu, said that the high-end trend in domestic beer has not changed. Judging from the performance of beer-listed companies, high-end product revenue has not declined. However, high-end upgrading is entering the second half. In terms of product structure, it is shifting from the traditional low-to-high “pyramid” model to more balanced development, which aligns with development trends previously seen in the Japan and South Korea markets.

“If we infer based on experience from the Japan and South Korea markets, the momentum for high-end upgrading in China’s domestic beer will remain in place over the next five years. Although the broader economic environment has changed, as a low-alcohol beverage, beer has its own unique advantages and roles. Therefore, China Resources Beer remains cautiously optimistic about the long-term development of the domestic beer industry.”

Zhao Chunwu believes that high-end upgrading in the beer industry entered the “second half” starting in 2025. The product structure is gradually changing from a “pyramid type” to a “balanced type.” The “top of the pyramid” will become larger over time, but it will not develop into an “inverted triangle.” At the same time, in the “second half” of high-end upgrading in the beer industry, the growth momentum over the next five years will not drop too much.

In addition, the Nandu Bay Finance and Water & Drink reporter also learned that in the future China Resources Beer will accelerate补齐 the shortfalls in the development of its emerging businesses, explore new business models, and actively promote the rapid development of customized and contract manufacturing businesses.

Baijiu revenue declines; goodwill impairment raises doubts about whether it’s “too early”?

Compared with the ongoing growth of the beer business, China Resources Beer’s baijiu business has been underperforming.

It is known that on January 10, 2023, China Resources Beer formally completed the closing of the transfer of a 55.19% equity stake in J金沙酒业. The M&A deal value was about RMB 12.3 billion. The large size of the deal drew industry attention. J金沙酒业 was officially included within the consolidated financial statement scope of China Resources Beer and was reflected as part of the baijiu business in the financial reports.

However, the Nandu Bay Finance and Water & Drink reporter learned that the baijiu business has not brought positive effects to China Resources Beer’s statements. After being consolidated, performance kept declining. The financial reports show that in 2025, China Resources Beer’s baijiu business revenue was RMB 1.5B, down 30.77% year over year; earnings before interest and taxes were RMB -3.35B, turning from profit to loss. But this loss was mainly due to China Resources Beer recording a unit goodwill impairment of RMB 2.88B based on the baijiu business’s cash flow.

“The impairment of the baijiu business has already fully taken into account factors including the macroeconomic environment, industry cycle, and consumption recovery, and we have also communicated sufficiently with the accounting firm.” In response to the recorded impairment, Zhao Chunwu explained that the impairment figures were required by the company’s prudent principle in financial reporting; the company performs stress tests every year. He further emphasized that China Resources Beer has firm confidence in its long-term approach for the baijiu business and will never divest it.

It is known that after entering the cross-industry baijiu business, China Resources Beer proposed the “beer+baijiu dual empowerment,” expecting to introduce baijiu into its existing beer channels. But in practice, it showed that there are still differences in the fit between baijiu products and beer channels.

In fact, when the “beer+baijiu dual empowerment” strategy was first proposed, the industry widely watched and questioned it. First, although there is some overlap in the target customers of baijiu and beer, the level of mutual conversion is not high. Second, there are significant differences between the baijiu and beer channels, including distribution models, cash collection cycles, and other aspects. How distributors can organically combine two product logics that are quite different is highly challenging.

Meanwhile, high inventory levels in the product channels of 金沙酒业 and the continued decline in alcohol prices became challenges that China Resources Beer has been focusing on solving since the acquisition. As previously reported by the Nandu Bay Finance and Water & Drink reporter, starting from early 2023, China Resources Beer has been aggressively clearing channel inventories for products such as abstracts, and has also conducted inspections in the market and reclaimed products with lower prices to support pricing. At the same time, it tightened relevant expenses.

In 2025, although channel inventory clearance for 金沙酒业 was temporarily brought to a close, the price of core products such as abstracts fell from the earlier mid-thousand yuan price band to the next high-end price band. According to price quotes from some distributor platforms, the abstract wine price is about RMB 380 per bottle, while the market transaction price is around RMB 450 per bottle.

“From the end of last year to today, product prices have been rising continuously and have stabilized at a reasonable level.” Zhao Chunwu said that how to balance the brand’s stable pricing for abstracts and improving value for money is, as manufacturers, primarily a matter of not overstocking. Once overstocking exceeds a distributor’s reasonable inventory needs, pressure on capital and inventory will ultimately force distributors to sell at lower prices.

The Nandu Bay Finance and Water & Drink reporter noted that in response to product price declines, 金沙酒业 restructured its product lineup at the national China Sugar, Tobacco and Liquor Fair in March 2025 and implemented tiered pricing. However, in May of the same year, after policy authorities substantially tightened government-related liquor consumption and politically related business consumption, 金沙酒业’s product sales were severely affected. Therefore, whether the baijiu business should be kept or exited has become a major question among many parties about China Resources Beer’s future development.

In response, Zhao Chunwu expressed affirmation of the baijiu business’s role in an earnings briefing, saying it is an important strategic transformation for China Resources Beer. “We put into baijiu on a full-time basis for just about 3 years. To examine—or even question—whether the entire strategy needs adjustment based solely on these 3 years, I think it’s a bit too early. We still need to keep working and persist for a while longer. We can’t deny the original strategic direction because of industry fluctuations.”

Written and edited by: Nandu · Bay Finance and Water & Drink reporter Beibei