Guo Guangchang once set a goal to turn Shede Spirits into a world-class liquor brand. However, as the company's profit is now expected to drop to under ¥200 million, down from a peak of ¥1.769 billion in 2023, and its market value has shrunk from over ¥80 billion to roughly ¥10.8 billion, the gap between this ambition and reality is widening. Shede Spirits, which markets itself with an "aged liquor" concept, is seeing its brand premium weaken in the market, and whether this strategy can steer the company back to growth is a central concern for investors.
At the end of 2020, Fosun Group acquired a 70% stake in Shede Group for ¥4.53 billion, marking a significant move by Guo Guangchang in the baijiu industry. At that time, the market was optimistic about the "Fosun empowerment + aged liquor strategy," and Shede's share price surged, pushing its market value above ¥80 billion.
Six years later, this once-promising "marriage" is facing an unprecedented test. On July 10, Shede Spirits released its semi-annual performance forecast for 2026, indicating that the company expects to achieve a net profit attributable to the parent company of between ¥135 million and ¥175 million in the first half of the year, a year-on-year decline of 69.55% to 60.52%. Since the company's net profit attributable to the parent was ¥232 million in the first quarter of 2026, the second quarter alone is estimated to have incurred a loss of approximately ¥56.56 million to ¥96.55 million.
What is even more striking to the market is the speed of the reversal. In the second quarter of 2025, the company was still able to achieve a profit of ¥97.17 million, but just one year later, the same period has turned from profit to loss. Over a full-year period, Shede Spirits first broke through the ¥1 billion profit threshold in 2021, reaching a historical peak of ¥1.769 billion in 2023, before sharply declining to ¥223 million for the full year 2025. Measured by half-yearly figures, the peak profit of ¥919 million in the first half of 2023 has now fallen to an estimated less than ¥175 million, a cumulative decline of over 80%.
Loss of Mid-to-High-End Products, "Aged Liquor" Premium Fades
Shede Spirits attributes this downturn to "active adjustments," with core actions being inventory control, price stabilization, and increased market investment. The company's official announcement states that it adheres to the core principle of "stabilizing prices, controlling inventory, and strengthening sales," moderately controlling shipments and actively supporting dealers in destocking. At the same time, the company has temporarily increased market investment, leading to high sales expenses in the first half of the year.
However, the performance on the revenue side reveals deeper issues. The company expects its operating revenue for the first half of 2026 to decrease by about 16% compared to the same period last year. The decline in profit is significantly greater than the decline in revenue, indicating that the company's profitability is being continuously eroded. Shede Spirits' net profit margin on sales has fallen from 28.08% in 2022 to a low of 4.78% in 2025. The weakening sales of mid-to-high-end products, which form the foundation of the company's revenue and profit, is the primary reason for the profit compression.
In the full year of 2025, sales of mid-to-high-end liquor, represented by Shede and Shezhi Dao, totaled 14,600 kiloliters, a year-on-year decrease of 13.11%, with sales revenue of ¥3.12 billion, down 23.83% year-on-year. Both sales volume and revenue declined. In contrast, ordinary liquor saw growth, with sales volume of 16,400 kiloliters, up 15.35% year-on-year, and revenue of ¥733 million, up 5.75% year-on-year. In 2024, both product categories had declined simultaneously, with sales revenue falling by 27.66% and 23.44%, respectively. By 2025, their trajectories diverged: one continued to decline while the other began to recover.
This divergence exposes a core contradiction: while Shede Spirits has been pushing for brand premiumization in recent years, the strong sales of Tuopai liquor suggest that the group's brand positioning is unclear. When consumers "vote with their wallets," they are choosing the more cost-effective Tuopai over the Shede main brand, which is the core of the "aged liquor strategy."
A more direct indicator is price. On major e-commerce platforms, after various promotions, Shede Spirits' official flagship store sells Zhihui Shede for as low as ¥481.1, with another platform listing it at a minimum of ¥430. The original price of approximately ¥600 for Pinwei Shede drops to ¥384 on e-commerce platforms after subsidies, and another platform offers a minimum price as low as ¥306.
According to today's liquor price data, the wholesale prices for Zhihui Shede and Pinwei Shede are ¥500 and ¥360, respectively, indicating a price inversion for both core products. When official stores and merchants are forced to lower prices, the product's real appeal in the market becomes clear.
The "aged liquor strategy" was intended to build a differentiated brand barrier, but the reality is that consumers are no longer willing to pay an extra premium for the "aged liquor" concept. From the demand side, the business banquet and gifting scenarios that sub-premium baijiu heavily relies on are shrinking. Consumers are either spending more on high-end staples like Moutai and Wuliangye or turning to high-value products in the ¥100 to ¥300 range, squeezing the living space for sub-premium brands.
The direct consequence of weakening product performance is a loosening of the dealer network. In 2025, the company's dealer base outside its home province decreased by 437, with 307 new additions, resulting in a net decrease of 130. Within the province, 79 dealers also exited. This trend continues the pattern from 2024, when the number of out-of-province dealers decreased by 356, also exceeding the 285 new additions. In 2023, the company had added 744 dealers. The shift from expansion to contraction, with dealers leaving, is a very real signal.
Notably, while facing pressure on product sales, Shede Spirits is pushing forward with large-scale capacity expansion. In 2025, the company initiated a production expansion project with a total investment of approximately ¥7.054 billion, planning to build the first phase of the Yonghe Smart Brewing Workshop and the Shede Liquor Culture Museum. The total project investment later increased to over ¥12 billion, with completion expected in 2030. Upon completion, the project is expected to add an annual production capacity of about 60,000 tons of base liquor and an additional storage capacity of about 342,500 tons for base liquor. Against the backdrop of shrinking demand, this counter-cyclical expansion strategy is facing growing controversy.
Capital Retreats: From ¥13.5 Billion Unrealized Gain to ¥2.2 Billion Loss
The impact of declining performance has also spread to the capital market. At the end of 2020, Fosun Group, through its subsidiary Yuyuan Inc., acquired a 70% stake in Shede Group for ¥4.53 billion. Fosun's investment in Shede Spirits, after a brief period of glory, is now facing a reality of value reassessment.
At the peak of Shede Spirits' share price, the market value of Fosun Group's stake was as high as approximately ¥18 billion, representing an unrealized book profit of about ¥13.5 billion. However, as of the close on July 24, the company's share price was ¥32.59, and the total market value had shrunk to about ¥10.8 billion. The market value of Fosun Group's holdings has shrunk to about ¥2.29 billion, meaning a book loss of nearly ¥2.2 billion compared to the ¥4.53 billion acquisition cost.
The withdrawal of institutional investors is equally evident. The number of funds holding shares has decreased from 226 at the end of 2023 to just 10 at the end of the first half of 2026. In terms of shareholding, these 10 remaining institutions held a total of 19.48 million shares by the mid-2026 report, a reduction of 126 million shares from the previous period, with the holding ratio falling from 47.61% to 5.87%.
It is noteworthy that Fosun Group itself is also in a contraction cycle. Over the past two years, the Fosun system has sold assets totaling over ¥80 billion, involving sectors such as Nangang Iron & Steel, a Belgian insurance company, and a German private bank. In the liquor asset sector, the Fosun system has already reduced its holdings in Tsingtao Brewery and Shunxin Agriculture. In 2025, Fosun International recorded a loss attributable to shareholders of the parent company of ¥23.4 billion. At a performance briefing in late March this year, the company's actual controller, Guo Guangchang, clearly stated a "firm determination to exit those assets with poor profitability or that do not meet value targets." This statement at the time sparked widespread market speculation. Against the backdrop of Fosun's continuous contraction of non-core assets, will Shede Spirits, with its sharply declining performance, be included on the exit list?
Another signal worth noting comes from a different dimension. The China Execution Information Disclosure Network shows that on July 17, Shede Spirits was listed as a person subject to enforcement by the Chengdu Intermediate People's Court of Sichuan Province. The subject matter of this enforcement was ¥0, and the specific reason was not disclosed. Appearing on the list of judgment debtors again after 21 years, even with a zero amount, this identity itself has a significant impact on market confidence.
Guo Guangchang once set a goal to turn Shede Spirits into a world-class liquor brand. However, as the company's profit is now expected to drop to under ¥200 million, down from a peak of ¥1.769 billion in 2023, and its market value has shrunk from over ¥80 billion to roughly ¥10.8 billion, the gap between this ambition and reality is widening. Shede Spirits, which markets itself with an "aged liquor" concept, is seeing its brand premium weaken in the market, and whether this strategy can steer the company back to growth is a central concern for investors.
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