Fuling Zhacai in the pain of transformation: net profit attributable to parent company has declined for three consecutive years, and marketing expenses will increase by 18% in 2025

Why is AI · Fuling Zha Cai’s transformation strategy leading to increased revenue but not increased profit?

Recently, Fuling Zha Cai released a mixed-joy annual report.

Data shows that by 2025, Fuling Zha Cai achieved operating revenue of 2.43B yuan, a year-on-year increase of 1.88%; net profit attributable to the parent was 768 million yuan, a decrease of 3.92% year-on-year.

The good news is that with the sales of new products launched under the “Zha Cai +” strategy, operating revenue finally ended two consecutive years of decline; the concern is that, for transformation and new product launches, marketing expenses have increased significantly, and net profit attributable to the parent continues its previous downward trend, declining for three consecutive years.

Fuling Zha Cai mainly engages in the research, production, and sales of Zha Cai products, Zha Cai soy sauce, and other convenient foods such as side dishes and flavorings. In 2022, the company established a core focus on Zha Cai, with a layout in four major directions: “Zha Cai +”, related categories, Sichuan-style complex seasonings, and Sichuan-Chongqing pre-made dishes.

Fuling Zha Cai’s former chairman, Zhou Binquan, stated in 2023: “Feedback from distributors is very good, the sauce itself is growing rapidly, and the market space is also large. We believe that in the future, sauce products and rice accompaniments should be important support points for performance growth.”

Now, three years later, according to the 2025 financial report, during the reporting period, Zha Cai achieved sales revenue of 2.06B yuan, a slight increase of 0.74% year-on-year, accounting for 84.69% of operating revenue.

Among related categories, kimchi has the largest revenue scale, achieving revenue of 214 million yuan during the reporting period, a decrease of 6.85% year-on-year; radish has become the most stable growth point in this category, with revenue of 57 million yuan in 2025, a year-on-year increase of 24.78%.

Sichuan-style complex seasonings are still in the product refinement and channel deployment stage, and have not yet formed a large-scale volume; Sichuan-Chongqing pre-made dishes are still in the testing phase and have not contributed substantial performance. From the revenue structure, the combined proportion of new categories remains relatively low, and overall, they are still in the “high growth, low proportion” cultivation stage.

To promote new product launches, Fuling Zha Cai has significantly increased sales expenses in recent years, with an 18.33% year-on-year increase last year. The annual report shows that from 2023 to 2025, the company’s sales expenses were 328 million yuan, 324 million yuan, and 383 million yuan respectively. Among them, marketing expenses were 220 million yuan, 200 million yuan, and 257 million yuan, totaling 677 million yuan over three years.

With nearly 700 million yuan invested in marketing over three years, Fuling Zha Cai’s overall revenue has not increased but decreased, leading to continuous profit decline.

In the past two years, Fuling Zha Cai has also been making significant adjustments to its sales strategy. The financial report shows that by the end of 2025, the number of distributors was 2,442, a decrease of 797 from the end of 2023. Among them, the net reduction in distributors was 190, with increases in the Central China sales region and export distributors, while other regions saw decreases in distributor numbers.

Channel contraction has further pressured the revenue and profits of the company, which is still in the adjustment period. Media reports indicate that some regional markets of Fuling Zha Cai lack coverage, terminal distribution and sales momentum have slowed, and combined with the clearance of inefficient distributors, there are gaps in traditional distribution channels, which have seen sluggish growth. Meanwhile, key regions like South China have seen a significant reduction in distributors, causing regional sales to fluctuate noticeably. Contract liabilities have decreased, accounts receivable have increased, and channel cash flow and turnover efficiency have been somewhat impacted.

“Fuling Zha Cai’s annual report shows a typical pattern of increased revenue but not increased profit. The company is shifting from single-product profitability to a growth model based on multiple categories, channel restructuring, and omnichannel operations,” said Chen Jingjing, founder of Jingjie Brand Consulting and strategic brand expert. She believes that the adjustment direction is not problematic, but the transformation path is more demanding and longer.

Chen Jingjing stated that in the short term, channel restructuring combined with front-loaded expenses will continue to pressure profits, with a painful period lasting at least 1–2 years; in the medium to long term, if new products and channels can achieve scale, the company is expected to move from being a “Zha Cai leader” to a “seasoning platform enterprise.” Conversely, it may fall into a long-term structural dilemma of increasing revenue but not profit.