Shenzhen Eternal Asia Supply Chain Management Ltd., once hailed as China’s first publicly listed supply chain company, expects to report its first annual loss since listing, underscoring the fallout from a cooling baijiu market and an overextended push into the sector.
The company said in a profit warning that it anticipates a net loss of 200 million to 300 million yuan (US$27.8 million to US$41.7 million) for 2025, reversing a profit a year earlier. The decline comes amid weakening performance in its alcohol business and mounting challenges among its liquor-related subsidiaries.
Eternal Asia’s warning follows a similar downturn at VATS Liquor Store, highlighting broader strain across China’s liquor distribution sector.
Founded in 1997 by Zhou Guohui, Eternal Asia built its reputation as a supply chain services provider spanning fast-moving consumer goods, healthcare and energy. It listed on the Shenzhen Stock Exchange in 2007.
Alcohol, particularly baijiu, became a key growth driver over the past decade. After entering the alcoholic beverage import business in 2008, the company expanded aggressively into baijiu distribution from 2013, partnering with leading brands including Moutai, Wuliangye and Luzhou Laojiao.
Through acquisitions and joint ventures with regional distributors, Eternal Asia rapidly built a nationwide network. At its peak, its liquor distribution business generated nearly 10 billion yuan (US$1.5 billion)in revenue.
Seeking higher margins, the company later moved upstream. Riding a surge in demand for sauce-aroma baijiu, it launched its own labels and acquired a distillery in Maotai Town. Revenue from its proprietary baijiu brands reached 1.245 billion yuan in 2021 before sharply declining.
By 2023, that figure had fallen by more than half to 588 million yuan. The company stopped disclosing baijiu sales data altogether in 2024.
The company attributed its expected loss to declining margins across its broader business, particularly in fast-moving consumer goods. Analysts say the downturn is closely tied to the prolonged slump in China’s baijiu market.
Demand for baijiu, long driven by business banquets and corporate entertainment, has weakened as economic growth slows and spending tightens. Even top-tier brands have faced falling prices and instances of price inversion, where wholesale prices dip below official retail levels.
The retreat of the sauce-aroma baijiu boom has further exposed distributors that rushed into the category in recent years, many of whom now face high inventories and sluggish sales.
Signs of retrenchment have already emerged at Eternal Asia. The company said it has disposed of 12 joint venture firms tied to its baijiu brands and exited its stake in a distillery in Guizhou province.
Financial stress has also surfaced among its affiliates. Chongqing Yifei Liquor Marketing Co., Ltd., a major distributor backed by Eternal Asia, has faced liquidity problems, including discounting inventory and delayed payments, as we have reported.
The company is also undergoing a leadership transition. Zhou has stepped down as chairman after nearly three decades, replaced by veteran executive Chen Weimin, in a move that signals a broader strategic reset.
Eternal Asia said it is shifting its focus toward new growth areas including consumer services, artificial intelligence computing and new energy materials, with alcohol no longer a core priority.
With China’s liquor sector still in a downturn, the company’s retreat marks a broader turning point for distributors that once rode the baijiu boom.
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