Vats Liquor Co., long hailed as “China’s first publicly traded alcohol distributor” and a key mainland agent for Penfolds and DBR Lafite, suffered an 81.1% collapse in net profit last year as inventory writedowns and shifting consumer habits converged to squeeze profits.
Annual wine sales held firm at roughly RMB 400 million, but a surge in e-commerce underscores the country’s shift from corporate hospitality toward mass-market drinking.
According to its 2024 annual report, operating revenue for the Hong Kong-listed company fell 6.5% to RMB 9.46 billion (US $1.30 billion), while net income attributable to shareholders plunged to RMB 44.4 million (US $6.1 million).
The blow landed hardest in the fourth quarter, when Vats posted a loss of RMB 123 million (US $16.9 million)—nearly 94% of the first quarter’s net profit, despite that period including the Spring Festival peak.
Management attributed the steep decline primarily to provisions for inventory write-downs, a prudent measure to reflect potential value erosion and prevent inflated asset values. Even flagship spirits such as Kweichow Moutai suffered value depreciation, forcing the company to shore up its reserves against further price volatility.
As one of China’s premier high-end beverage marketers, Vats Liquor distributes baijiu, imported wines and spirits through an omnichannel network encompassing its own chain stores, retail outlets, hypermarkets, group-buy platforms and e-commerce.
Wine Sales
In its wine division, the company has teamed up with Master of Wine Alun Griffiths to curate more than 500 premium labels from around the world, and partners with Treasury Wine Estates and Baron Philippe de Rothschild. Its logistics footprint spans over 40 warehouses totaling 50,000 m².
Wine revenue slipped 13.7% to RMB 420 million (US $57.5 million) in 2024, though volume inched up 1.3% to 2.12 million litres. Despite the value drop, Vats remains among China’s leading wine importers—ranked near the top of our “China’s Top 100 Wine Importers”—even as wine contributes only 4.4% of group sales.
Regionally, East China stayed its core market, generating RMB 2.90 billion (US $397 million), or 30.7% of total revenue, down 9.2% year-on-year.
E-commerce
By contrast, the e-commerce segment exploded, with sales jumping 72.9% to RMB 2.09 billion (US $286 million), making it the company’s second-largest revenue stream at 22.1%. Vats credits aggressive Spring Festival promotions and heightened platform demand for fueling this rapid growth.
This digital pivot reflects a broader transformation in China’s drinking habits. As Vats Liquor noted in the financial report, corporate spending on alcohol is softening and individual consumers and online channels are stepping into the breach. This forces legacy distributors like Vats Liquor to rethink their strategies, diversify retail touchpoints and embrace the competitive pressures of e-commerce.
While the downturn in high-end sales presents challenges, the mass-market surge offers a clear pathway to renewed growth.
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