Diageo's baijiu bet met the winter: Swellfun cut its own shipments

Swellfun distills above the 600-year-old workshop site uncovered in Chengdu in 1998, positioned at the premium end. Diageo bought its controlling shareholder Quanxing Group in four tranches between 2006 and 2013, raising its stake to 63.14% in the 2018–19 tender offers — making it the only foreign-controlled listed baijiu maker on the A-share market. FY2024 was the peak: revenue ¥5.22 billion, profit ¥1.34 billion, ¥4.76 billion of it high-end bottles. Management churned beneath the owner: seven general managers between 2011 and 2024, each lasting about two years.

FY2025 (published April 29, 2026): revenue ¥3.038 billion, down 41.77%; attributable profit ¥406 million, down 69.73%. The wholesale channel carrying the brand's core was halved, down 50.95%; high-end liquor fell 43.59% to ¥2.687 billion; Q4 made ¥80 million of profit on ¥690 million of revenue. Operating cash flow turned negative at -¥624 million. Inventory rose 21.6% to ¥3.911 billion — 46% of total assets, 91% of it base liquor — and turnover stretched from 1,134 days to 2,095. Severance cost ¥44 million; short-term borrowings went from zero to ¥1.032 billion.

The company says part of the fall was chosen: 'active shipment control' — shipping less to hold prices. The distributor count rose by a net 40 to 101 while average revenue per distributor collapsed from ¥82.21 million to ¥28.11 million. The Shanghai exchange's inquiry letter, answered in July 2026, covered ¥912 million of factored receivables and a ¥791 million concentrated dividend to Diageo's GMIHL. The owner itself is wavering: Diageo's May 2025 'Accelerate' plan named selective disposals, analysts put Swellfun on the list, and its CEO has called baijiu a market 'without sufficient scale'.

Swellfun cut its own shipments to hold prices, but revenue fell 41.8% and profit 70%, with cash flow negative at -¥624 million.

Premium concentration: 88% of revenue in high-end liquor sold to business banquets. When that scene stopped recovering, there was no cheaper tier to catch the fall.

Capacity arrived at the worst moment: ¥2.628 billion capitalised on the Qionglai base with ¥134 million of annual depreciation, while inventory days stretched to 2,095.

The owner's conviction wavered: Diageo called baijiu a market without scale, flagged disposals by FY2028, and rotated seven general managers in thirteen years.

Under Diageo, Swellfun became a pure premium-baijiu bet: high-end bottles and new capacity. When the banquet economy stopped, it had to shrink itself on purpose — revenue -42%, profit -70%.

Q1 2026 shows the decline narrowing: revenue ¥816 million, down 14.9%, profit ¥171 million, operating cash flow back in positive territory at ¥70.21 million, selling expenses cut by a quarter. The balance sheet still carries the bet: ¥3.911 billion of inventory turning once every 2,095 days, ¥1.032 billion of new short-term debt, and an owner that has held the asset since 2006 and is now publicly weighing whether to keep it. Whether shipment control can defend prices until the banquet economy returns — and whether Diageo will wait that long — is the open question.