Yan's House's "Cost Reduction and Efficiency Improvement" leads to profit growth, but celebrity entrepreneurs' endorsements can't save the revenue decline

Image source: Visual China

Blue Whale News, March 19th (Reporter Dai Ziting) The “First Stock of Bird’s Nest” Yan Zhiwu (01497.HK) has delivered a seemingly contradictory 2025 performance report: revenue decreased, but profits increased.

On March 17th, Yan Zhiwu announced its 2025 annual results: total revenue was 2.001 billion yuan, down 2.41% year-over-year; however, net profit attributable to the parent company rose by 20.64% to 189 million yuan, showing revenue pressure but profit improvement.

Notably, just before this financial report was released, Yan Zhiwu had recently concluded a ten-year trademark dispute—Fujian High Court’s final ruling confirmed “Yan Zhi Chu” trademark infringement and unfair competition, requiring the latter to pay 10 million yuan in damages and change its name to “Yan Hongji.”

Chinese food industry analyst Zhu Danpeng told Blue Whale News that as a leading industry brand, Yan Zhiwu has strong brand effects, supply chain capabilities, and consumer base. The company actively adjusted its strategy and optimized operations in response to external environmental changes, demonstrating strong operational resilience.

Smart manufacturing and cost optimization have taken effect, improving Yan Zhiwu’s profits

A review of the financials shows that Yan Zhiwu’s profit growth did not come from sales boosts but from internal cost-cutting and efficiency measures. The report indicates that, with upgrades in smart manufacturing and process improvements at new factories, Yan Zhiwu’s 2025 cost of sales decreased by 10.36% to 930 million yuan, a much larger decline than the 2.41% revenue drop. This cost optimization directly increased gross margin by 4.13% to 53.53%.

Meanwhile, the company is also cutting expenses. Selling and distribution expenses, after years of continuous growth, first declined year-over-year by 1% to 664 million yuan; R&D expenses fell by 10.63% to 26 million yuan.

From historical data trends, Yan Zhiwu’s revenue growth has significantly slowed—from 15.82% in 2021 to negative growth in 2025. In 2024, the company experienced its first profit decline in five years, with net profit down 24.18% YoY. Inventory peaked at 360 million yuan in 2023 and gradually decreased to 270 million yuan in 2025, indicating active inventory reduction. Cash and cash equivalents, after reaching a peak of 537 million yuan in 2023, have fallen back but rebounded to 636 million yuan in 2025.

Regarding the revenue decline, Yan Zhiwu explained it as “mainly due to macro consumption structure adjustments, slowing demand for high-end consumer goods, and offline store revenue growth not meeting expectations.” Behind this explanation are the dual pressures the company faces.

In terms of product matrix, the core revenue source—pure bird’s nest products—earned 1.771 billion yuan in 2025, down 1.35% YoY; due to underwhelming promotion of new bird’s nest derivatives, the Bird’s Nest+ and other series revenue also declined 7% to 216 million yuan.

Channel-wise, offline revenue was 730 million yuan, down 9.6%, with the total number of stores decreasing by 26 to 732. Online, through increased efforts in interest e-commerce and KOL marketing, online revenue reached 1.271 billion yuan, up 2.29%, accounting for 63.51% of total revenue.

Strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, Zhan Junhao, told Blue Whale News that this essentially reflects a shift from scale expansion to profit prioritization. “Revenue decline combined with reductions in costs, R&D, and marketing expenses indicates that under cooling high-end consumption, the company is reducing investments and optimizing expense structure to achieve profit growth. This also suggests that its long-dependent high-marketing-driven model may no longer be sustainable, shifting toward cost control and efficiency.”

Notably, just before this financial report, Yan Zhiwu had recently settled a long-standing issue.

Recently, Fujian Higher People’s Court issued a second-instance judgment dismissing Yan Zhi Chu’s appeal and upholding the original ruling: “Yan Zhiwu” is recognized as a well-known trademark, and “Yan Zhi Chu” constitutes trademark infringement and unfair competition. The latter must cease using related marks and company names, pay 10 million yuan in damages, and cover 230,000 yuan in reasonable rights protection expenses, with a public announcement to eliminate the impact. The judgment noted that the compensation amount referenced Yan Zhi Chu’s self-reported total sales of approximately 265 million yuan from 2014 to 2023 in administrative cases, and the 10 million yuan claim was considered a restrained exercise of rights.

The core of this dispute is the one-character difference in the trademarks “Yan Zhiwu” and “Yan Zhi Chu.” Founded in 2014, Yan Zhi Chu Health Beauty (Xiamen) Food Co., Ltd., also based in Xiamen, operates in bird’s nest products and processing services, and has registered dozens of related trademarks.

Yan Zhiwu’s legal rights protection journey was not smooth. Courts initially found the trademarks not similar, causing a deadlock. The turning point came in 2022 when Yan Zhiwu applied for retrial at the Supreme People’s Court, which after review, ruled that “Yan Zhi Chu” and “Yan Zhiwu” are highly similar in text and pronunciation, and considering market confusion, the two trademarks are similar. In 2024, Yan Zhiwu initiated civil litigation and ultimately gained cross-category protection based on its well-known trademark status.

After losing the case, Yan Zhi Chu rebranded as “Yan Hongji Health Beauty (Xiamen) Food Co., Ltd.” citing “group strategic development.”

Li Gongli and Zhu Yilong, Yan Zhiwu’s star endorsers

So, where does Yan Zhiwu’s marketing budget go?

High marketing expenses have long been a prominent feature of Yan Zhiwu’s financials. From 2020 to 2022, the company’s advertising and promotion costs totaled 831 million yuan. From 2021 to 2024, sales and distribution expenses rose from 399 million to 671 million yuan, maintaining a long-term expense rate of 26% to 33%. In 2025, this expense slightly decreased by 1% YoY to 664 million yuan, but still remains high.

Notably, as of the end of 2025, Yan Zhiwu’s prepayments totaled about 64.97 million yuan, down 14.5% from 75.99 million yuan at the end of 2024; among them, prepayments for advertising expenses were 45.75 million yuan, down 21.2% from 58.07 million yuan in 2024, but still accounting for over 70% of total prepayments. This indicates that while the company is actively reducing costs, it has not significantly cut back on star endorsement investments.

An industry insider told Blue Whale News that heavy spending on star endorsements reflects the serious homogenization of bird’s nest products and the difficulty in establishing brand barriers. In the ready-to-eat fresh bird’s nest segment, with limited differences in raw materials and processes, success heavily relies on marketing investments to stand out.

Yan Zhiwu is well aware of this, maintaining high-profile star endorsements to sustain a high-end brand image, aiming to build a brand moat in consumers’ minds. Looking back at its development, in the early stage of market expansion, the company relied heavily on star effects.

In 2008, shortly after her wedding, Carina Lau appeared in Xiamen as Yan Zhiwu’s brand ambassador. The commercial directed by Guan Jinpeng and art-directed by Zhang Shuping featured Lau saying, “When it comes to bird’s nest, I only choose Yan Zhiwu bowls,” quickly boosting brand awareness. Since then, they have signed stars like Lin Chi-ling and Zhao Liying, continuing the “luxury lady” image.

Yan Zhiwu continues to invest in star endorsements. In January 2024, the company announced Gong Li as its global brand ambassador; in May, it announced Wang Yibo as its global ambassador, forming a “world star + young idol” endorsement matrix. The company stated this aimed to “precisely target diverse consumer groups”—Gong Li to strengthen the high-end image with her international reputation, and Wang Yibo to engage younger audiences with trendy content. However, this dual endorsement strategy did not deliver the expected sales boost. In 2024, revenue from pure bird’s nest products increased by only 0.06%, and net profit fell 24.18% for the year.

In March 2025, Yan Zhiwu attempted to explore new markets by inviting Vanke founder Wang Shi as a brand ambassador and launching “President’s Bowl Bird’s Nest,” aiming at high-net-worth male consumers. This product combines bird’s nest, Dendrobium, white ginseng, and other eight ingredients, priced at 3,168 yuan per box (6 bowls), with a high unit price of 528 yuan per bowl. However, as of March 19, 2026, the product had only 48 buyers on Tmall’s official flagship store, with sales exceeding 100 boxes.

As consumer transparency and rationality increase, relying solely on star endorsements may no longer fundamentally solve brand market competition issues, especially given the crowded bird’s nest market.

In the traditional ready-to-eat and dried bird’s nest sectors, established brands like Tongrentang and Lei Yun Shang rely on “pharmaceutical backing” to share market share; meanwhile, in the high-growth segment of fresh-cooked bird’s nest, Xiaoxian Stew has pioneered the “fresh-cooked model,” with 27 offline luxury stores, becoming a direct competitor to Yan Zhiwu.

What’s more, traditional brands face anxiety as cross-industry players enter from all directions: Yili’s high-end health brand “Yanyang” partnered with JD Health to launch milk and oat bird’s nest porridge, injecting dairy supply chain advantages into the supplement track; even Walmart and Sam’s Club are deploying community stores to bring ready-to-eat bird’s nest and bird’s nest porridge into more mainstream consumer scenarios.

In response, Yan Zhiwu is trying new strategies. In September 2025, the company announced Zhu Yilong as its global brand ambassador, forming a dual endorsement with Gong Li. It also launched “Yan Yu New Tea” in the tea beverage segment, combining “tea + bird’s nest” to target young consumers; and introduced an independent brand “YANPEP,” focusing on oral bird’s nest peptides and collagen drinks, extending bird’s nest applications into beauty and health sectors.

According to the “2025 China Bird’s Nest Industry Development White Paper,” the market size is expected to reach 95 billion yuan in 2025, with a compound annual growth rate of 12%-14% over the past five years. Among these, fresh-cooked/instant bird’s nest accounts for 60% (about 57 billion yuan), with sales increasing by 16.09% from 2024 to 2025.

The trademark victory helps Yan Zhiwu defend its brand boundaries; smart manufacturing upgrades open new profit space. For this “bird’s nest first stock,” how to turn short-term profit recovery into long-term growth remains to be seen by the market.