Tianwei Food's Net Profit Decline: Impairment Drags Down Net Income, Are Externally-Driven Expansion Risks Beginning to Emerge?

Listing: Sina Finance Listed Company Research Institute

Author: Hao Xian

On the evening of March 11, Tianwei Food was the first to disclose its 2025 annual report. Data shows that the company achieved operating revenue of 3.449 billion yuan in 2025, a decrease of 0.79% year-on-year; net profit attributable to shareholders of 570 million yuan, down 8.79%; and net profit after non-recurring gains and losses of 508 million yuan, down 10.22%. This is the company’s first performance decline since 2021.

In recent years, beyond hotpot base sauces, Tianwei Food successfully developed a second growth curve with Sichuan cuisine seasonings and sausage and cured meat seasonings, driving significant growth in performance. However, in 2025, the company’s main products stalled simultaneously. Management openly admitted facing increased industry competition, channel destocking, and slowing demand for traditional categories.

In previous years, Tianwei Food was keen on external expansion through acquisitions to drive growth. Amidst stagnating performance, the risk of goodwill impairment began to surface.

Growth Engine Fails to Accelerate

Tianwei Food’s revenue mainly comes from hotpot seasonings, recipe-style seasonings, and sausage and cured meat seasonings. In 2025, revenues from these three categories declined by 2.87%, 0.2%, and 12.52%, respectively.

Notably, recipe-style seasonings and sausage and cured meat seasonings ended years of rapid growth. In terms of sales volume, recipe-style seasonings decreased by 8.99% year-on-year, while sausage and cured meat seasonings dropped by 14.67%.

These two businesses were once key growth engines for Tianwei Food. In 2022, recipe-style seasonings accounted for about 44% of revenue, and sausage and cured meat seasonings about 7.5%. By 2024, the proportion of recipe-style seasonings rose to 51%, and sausage and cured meat seasonings to 9.5%.

Looking at channels, offline revenue last year decreased sharply by 12.76%. Although online sales grew by 56.91%, this was not enough to fully offset the offline losses.

In contrast, as of the end of 2025, Tianwei Food’s total number of distributors reached 3,363, an increase of 11.47% from the beginning of the year. However, significant recruitment did not translate into performance growth.

Management stated at the earnings conference that the increase in distributors was mainly due to expanding into lower-tier markets and underserved areas, as well as optimizing and eliminating inefficient distributors. The pressure on offline revenue was mainly due to intensified industry competition, channel destocking, and slowing demand for traditional categories.

The seasoning industry products can be divided into single-season flavorings and compound-season flavorings. Single-season flavorings include MSG, soy sauce, vinegar, cooking wine, and oyster sauce. Compound-season flavorings include chicken essence, hotpot seasonings, and recipe-style seasonings. As residents’ lifestyles accelerate, compound-season flavorings not only solve the seasoning difficulties for those with less cooking experience but also meet consumer demands for convenience, small packaging, and shorter cooking times. Coupled with the popularity of takeout, fast food, and increasing restaurant chain penetration, this has driven demand for compound seasonings in the catering channel.

However, behind the overall growth of the compound-season flavoring market, the industry is moving toward diversification. Besides traditional spicy flavors like Sichuan and hotpot, there are specialized seasonings for dishes such as pickled fish, crayfish, and Mapo tofu, as well as regional flavors like Cantonese, Hunan, and Northwest styles.

This means the market is relatively fragmented, making it difficult for leading companies to dominate entirely. Additionally, since the seasoning industry has low barriers to entry, rapid entry by new participants often leads to fierce competition and quick erosion of segment profits.

In 2024, Tianwei Food publicly “declared war” on competitors, issuing notices to distributors prohibiting them from selling hotpot products from Qianhe Weiye and recipe-style compound seasonings from JiXiangJu, the leading brands under these companies. The main reason was that the expansion of Qianhe Weiye and JiXiangJu encroached on Tianwei Food’s territory.

External Expansion Risks Exposed?

Looking at net profit, Tianwei Food’s net profit last year declined much more sharply than revenue, mainly due to asset impairments. The total impairment in 2025 reached 30.6993 million yuan, an increase of 78.45%. The main causes were impairment losses on long-term equity investments and inventory write-downs.

Regarding long-term equity investments, in March 2023, Tianwei Food led a Series A funding round for Sichuan Mobi Brand Uchuang Technology Co., Ltd. (hereafter “Mobi Uchuang”), holding 9.95% of its shares. In 2026, the company will perform impairment testing on this investment, recognizing an impairment loss of 28.4031 million yuan.

Public information shows that Mobi Uchuang was founded in 2019, focusing on incubating small restaurant chain brands, with flagship brands such as Malubianbian Skewers, Old Street Spicy Hot Pot, and Duyu Hot Pot Cups. In recent years, the restaurant industry has faced weak downstream demand and intensified competition, increasing pressure on chain operators. Notably, Mobi Uchuang has previously experienced food safety issues, and according to the 2025 annual report, its revenue in 2025 was 124 million yuan, down 38% year-on-year, and down 62% compared to 2023.

In fact, in recent years, Tianwei Food has engaged in a series of external acquisitions, with performance growth heavily reliant on M&A. According to incomplete statistics, in the first half of 2023, Tianwei Food invested 362 million yuan to acquire a 55% stake in Sichuan Shicui Food Co., Ltd. (hereafter “Shicui Food”). In November 2024, it acquired a 63.84% stake in Jiadian Zwei. In September 2025, Tianwei Food’s subsidiary purchased a 42.25% stake in Yipinwei Xiang for 100 million yuan and increased capital in Yipinwei Xiang, ultimately holding 55%.

As of 2025, the book value of goodwill remained high at 445 million yuan. Among the acquired companies, Shicui Food’s revenue achievement rate last year was only 79.19%, and in 2024, it was 89.9%, both below performance commitments for two consecutive periods.

Under the influence of intensified competition, channel destocking, and slowing demand for traditional categories, the risk of goodwill impairment for Tianwei Food cannot be ignored.

On the other hand, in 2025, Tianwei Food increased expenses, with sales expenses reaching 490 million yuan, a rise from 12.98% to 14.22% of revenue. The rising expense rate squeezed net profit margins, significantly contributing to the sharp decline in net profit.

Specifically, last year’s sales expenses saw employee compensation increase by nearly 18%, related to the consolidation of Yipinwei Xiang and the company’s own channel investments. However, heavy investment did not translate into performance growth.

Additionally, consolidation led to a substantial increase in inventory, which rose by 83% to 212 million yuan in 2025. Last year’s inventory impairment losses also increased significantly.

Against the backdrop of intensifying industry competition, the risks associated with Tianwei Food’s external expansion are already emerging. Does the performance decline in 2025 signal a turning point?