On October 28, Shede Spirits delivered an eye-catching third-quarter report. In the first three quarters, the company achieved revenue of 3.096 billion yuan and net profit attributable to shareholders of 195 million yuan. While overall performance was still declining, a turning point has emerged: third-quarter net profit attributable to shareholders reached 49.5514 million yuan, up 72.44% year-on-year, ranking first among baijiu companies that have disclosed their third-quarter reports so far.
In recent years, the baijiu industry has entered a period of deep clearing, with the sub-high-end price segment being the hardest hit. In this environment, liquor companies face a choice: push inventory onto channels to protect current revenue and performance, or proactively control volume in exchange for a healthy pricing system and channel ecosystem. Shede Spirits Co.,Ltd. (SHA: 600702) chose the latter, maintaining price stability and channel health through proactive volume control. While shoring up its foundation, the company is advancing transformation on one hand, going "fully consumer-oriented," and on the other hand implementing a dual-brand strategy, using Shede to hold the sub-high-end price band and Tuopai to capture the mass-market price band, while leveraging internationalization and youth-oriented initiatives to position for the next growth cycle.
Shede Spirits Reaches an Inflection Point: Short-Term Pain Yields Healthier Channels and Stable Core Product Pricing
From the third-quarter report, Shede Spirits' operations are recovering. Let's look at several leading indicators. First, core performance metrics improved. Third-quarter revenue reached 809 million yuan, down 19.18% year-on-year, a significantly narrower decline than in the second quarter. Third-quarter net profit attributable to shareholders was 49.5514 million yuan, up 72.44% year-on-year, with non-recurring net profit growth reaching 128.54%. The improvement is the result of both "volume control to support pricing" and "refined management." On one hand, third-quarter gross margin rose 4.7 percentage points year-on-year, primarily supported by stable pricing of core products such as Pinwei Shede. On the other hand, management expenses fell 26% year-on-year in the first three quarters, and operating costs decreased 11.53% year-on-year, reflecting continuous optimization of the expense structure and improving operational efficiency.
Second, cash flow continued its positive growth trajectory. Third-quarter net operating cash inflow was 176 million yuan, up 132.81% quarter-on-quarter. Cumulative net operating cash flow for the first three quarters was 149 million yuan, turning positive from negative in the same period last year. Notably, cash received from sales of goods in the first three quarters reached 3.432 billion yuan, with a cash collection ratio of approximately 111%, up 10.94 percentage points year-on-year. This data proves strong terminal sell-through and active channel payments.
Third, pricing of the core flagship product Pinwei Shede remained solid, while mass-market products achieved growth. In the first three quarters, Shede Spirits continued its strategy of controlling shipment pace and supporting distributors in destocking. While stabilizing high-end product pricing, it leveraged mass-market products to drive growth. Tuopai Teji T68 is Shede Spirits' flagship product in the mass-market price band, precisely serving high-frequency essential scenarios such as daily self-consumption and casual gatherings among ordinary consumers with its extreme value proposition. This product captured the rapid expansion dividend of the mass-market segment and has achieved rapid growth since its launch. In the first three quarters of this year, mass-market liquor represented by Tuopai Teji T68 continued to grow, driving a slight year-on-year increase in revenue from regular liquor sales.
Fourth, the channel ecosystem has been repaired, with distributors returning to positive growth. As of the end of the third quarter, the company had a total of 2,476 distributors, a net increase of 23 from the end of June. From clearing inefficient outlets and optimizing channel structure in the first half to quality distributors returning in the third quarter, this marks the basic completion of Shede's channel reform.
Overall, in this round of deep baijiu industry adjustment, Shede Spirits has proactively chosen to confront cyclical challenges. Since 2024, it has strictly implemented the policy of "controlling volume, supporting pricing, and clearing inventory," sacrificing shipment volume to protect terminal pricing and distributor profits. After three years of proactive adjustment, the pain on the financial statements has been exchanged for healthier channels and stable pricing of core products, forging new growth engines. Now, Shede Spirits may be approaching an inflection point.
Reshaping Competitiveness During Industry Adjustment to Build Potential for the Future
China's baijiu industry has bid farewell to the era of total expansion with simultaneous volume and price growth, entering a stage of stock competition characterized by shifting growth drivers, pressure on volume and price, and intensifying differentiation. Future growth will no longer come from total expansion but from structural dividends amid consumption divergence. The high-end price band, with brand value premiums and collectible attributes, serves as the ballast for industry profits; the mass-market price band, driven by consumption scenarios such as daily self-consumption, gatherings with friends and family, and banquets, has become the fastest-growing and most certain segment across the industry.
Facing this fundamental shift in industry logic, Shede Spirits uses a dual-brand strategy to position itself at both ends of the structural dividend: upward, it anchors the high-end price band with its aged liquor strategy; downward, it captures the essential consumption segment with mass-market flagship products.
The core confidence for upward breakthrough comes from Shede's aged liquor reserves. Since 1976, Shede Spirits has set aside a certain proportion of the finest base liquor from each batch for strategic storage. Through continuous accumulation, the company has built a large-scale, well-graded reserve of premium aged liquor and base liquor, establishing a scarce aged liquor moat in the industry. This irreplaceable aged liquor asset is the core support for Shede Spirits to anchor the sub-high-end and above price bands and achieve continuous upward breakthroughs in brand value.
The growth lever for downward expansion is the strategic flagship product Tuopai Teji T68. As the core vehicle for Shede Spirits' mass-market liquor strategy, T68 carries the strategic mission of opening incremental space in the mass-market segment and building a second growth curve. Against the backdrop of industry-wide sell-through pressure, Tuopai Teji T68, with its advantages of "premium quality plus renowned brand endorsement plus extreme value proposition," has maintained high growth in terminal bottle openings, forging a growth path driven by genuine consumption while laying a solid foundation for the company to capture mass-market segment dividends.
The process of deep industry clearing is both a period of concentrated risk release and a golden window for companies to reshape competitiveness and plan for the future. On October 29, Shede Spirits' 2026 Distributor Summit was held in Chengdu. Based on its judgment of the industry backdrop and future growth logic, Shede Spirits' management formally established the "Five Focuses and Three Innovations" operational framework, with "Extreme Four Forces" as the implementation lever, forming a complete operating system of "consolidating existing business, expanding incremental business, and strengthening capabilities." Facing the reality of industry-wide volume contraction, the company firmly makes trade-offs, concentrating resources on core products, core markets, core customers, core terminals, and core consumers to solidify its existing foundation. At the same time, it targets structural opportunities amid industry transformation, actively expanding incremental space around new channels, new consumer groups, and new scenarios. Through three major innovations, it breaks the growth boundaries of traditional baijiu, continuously tapping structural increments and building new growth engines. With extreme product strength, extreme brand strength, extreme channel strength, and extreme organizational strength, it drives the implementation of operational strategies.
Overall, Shede Spirits has proactively adjusted during the industry trough, stabilizing pricing through volume control, and through channel optimization and continuous innovation in products and operations, it has accumulated long-term potential for future recovery.
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