Shuijingfang, one of Sichuan’s better-known premium baijiu brands and the only listed Chinese baijiu firm majority‑owned by a foreign drinks giant, reported a dramatic profit hit for 2025, underscoring a wider industry downturn. The company told investors it expects revenue of 30.38 billion yuan in 2025, a 42% drop year-on-year, and a net profit attributable to shareholders of 3.92 billion yuan, down 71% — its weakest profit since 2018.
The surprise is both in the size of the decline and how far it missed market expectations. Since August 2025, 22 brokerages tracked by Wind had pencilled in consensus forecasts of 38.32 billion yuan in revenue and 6.58 billion yuan in net profit for the year. Shuijingfang blamed the fall on a confluence of macroeconomic weakness, an industry inventory glut and structural change in consumption patterns, noting particularly slow recovery in traditional business banquet demand.
Ownership dynamics add a geopolitical and strategic wrinkle. British spirits giant Diageo owns roughly 63.27% of Shuijingfang and has itself been facing sluggish demand both in China and in its core markets. Diageo’s most recent annual results showed barely positive organic net sales growth and declining adjusted operating profit, and the company has reportedly been sounding out banks about potential sales of some Chinese assets, drawing interest from local strategic buyers and private equity.
The pain is not unique to Shuijingfang. Across 21 A‑share listed baijiu companies, only a handful — including Kweichow Moutai and Shanxi Fenjiu — posted growth in the first three quarters of 2025. Many others, such as Kouzi Distillery, warned of profit plunges of 50–60%. Producers have responded by adjusting product lines and distribution strategies: several major houses launched lower‑ABV and more fashionable offerings aimed at younger and female consumers, and dealers report renewed emphasis on new channels beyond the traditional middle‑aged, business banquet base.
Policy changes have intensified the shock. A revised “anti‑waste” regulation that came into force in May 2025 explicitly bans alcohol at official receptions, removing a predictable source of high‑end demand and accelerating a shift away from large‑scale business drinking. That regulation interacts with longer‑term demographic shifts — young consumers drink less and prefer different occasions and formats — leaving legacy premium brands exposed.
For investors and strategic buyers, the current environment poses both risk and opportunity. Elevated inventories and falling top‑line demand compress margins and weaken near‑term valuations, yet expectation gaps between company guidance and broker models mean assets such as Shuijingfang could attract takeover interest at discounts. Whether Diageo chooses to divest — and what price it could command — will be a key barometer of foreign investors’ appetite for China’s distressed premium consumer sectors.
In short, Shuijingfang’s numbers are a canary in the coal mine: a reminder that China’s spirits market is undergoing structural rather than cyclical change. Firms that can realign product portfolios, rationalise channels and manage distributor inventories will stand a better chance of navigating what may be an extended adjustment period.