Summary of the Conference Call on the Baijiu Industry Industry Overview - The conference call focuses on the Baijiu industry, particularly the performance of leading brands during the Chinese New Year period, highlighting a phase of recovery from a significant industry downturn [1][2]. Key Points 1. **Core Themes**: The main themes discussed are "differentiation" and "bottoming out," indicating the first phase of recovery in the industry cycle [1]. 2. **Sales Performance**: Overall sales in the Baijiu industry declined by approximately 10%, which aligns with expectations. However, leading brands such as Moutai and Wuliangye performed better than anticipated [1]. 3. **Brand Performance**: - Moutai's sales, shipments, and pricing exceeded expectations during the Chinese New Year, with a reported increase in cash returns and a 15% growth in sales volume [1]. - Wuliangye also saw a sales increase of about 5% year-on-year, attributed to its strong brand power and competitive pricing [1]. 4. **Market Segmentation**: - There is a notable differentiation in brand and price positioning, with high-end brands like Moutai and Wuliangye performing well, while many other brands are still in an adjustment phase [1][2]. - Mid-to-high-end brands are showing better performance, while the sub-high-end segment is under pressure [1]. 5. **Pricing Strategies**: - Companies are adopting varied pricing strategies; some, like Moutai and Wuliangye, are reducing prices to maintain volume, while others, such as Guojiao and Fenjiu, are maintaining prices to enhance brand prestige [2]. 6. **Consumption Scenarios**: - The demand for Baijiu in self-consumption and gifting scenarios is strong, while the government and business consumption remains under pressure [2]. - A decline in demand is expected post-holiday as self-consumption and gifting needs decrease [2]. 7. **Inventory Levels**: - The overall industry is at a bottoming out stage, with leading brands' core product prices stabilizing and inventory pressures remaining manageable [2]. - Core products like Moutai and Wuliangye have seen their inventory levels drop to healthy levels, reducing the risk of significant downward price adjustments [2]. 8. **Investment Recommendations**: - The current phase is viewed as the first stage of recovery in the industry cycle, with strong recommendations for investing in Moutai and Wuliangye, while monitoring regional brands for potential performance [3][4]. Additional Insights - The call emphasizes the importance of brand strength in driving recovery and demand in the Baijiu market, suggesting that leading brands are likely to recover faster than others [4].

Investment Rating - The report maintains a "Recommended" rating for the industry, indicating a positive outlook for the sector's fundamentals and expectations for the industry index to outperform the benchmark index [21]. Core Insights - The overall sales performance during the 2026 Spring Festival met pre-holiday expectations, with a double-digit decline observed. High-end and mass-market price segments showed resilience, while the sub-premium segment faced some pressure. The demand for family consumption and personal gatherings significantly increased, leading to a continuous rise in their market share [1][2]. - Inventory levels post-holiday were lower than the previous year, and channel burdens continued to ease. The supply side is tightening, and the industry is expected to stabilize price levels, particularly for leading brands like Moutai and Wuliangye, which are projected to maintain their price support [2][3]. - The report suggests a selective investment strategy focusing on strong leading brands and those with better-than-expected sales performance, particularly recommending Moutai, Wuliangye, and Yingjia Gongjiu [7]. Summary by Sections Industry Sales Performance - The overall sales during the Spring Festival were in line with expectations, with high-end and mass-market segments showing strong resilience while the sub-premium segment faced challenges. The demand from family and personal gatherings has notably increased [1][2]. - Moutai's sales performance was particularly strong, with a 15% increase during the festival, and inventory levels are currently very low, supporting a stable price around 1700 RMB [2][3]. Brand Performance - Wuliangye also performed better than expected, with sales growth attributed to brand strength and Moutai's price stabilization. Current inventory levels are manageable, with prices holding steady around 790-800 RMB [3]. - Shanxi Fenjiu showed stable performance, with some regions reporting growth, while Luzhou Laojiao's sales met expectations, although high-end products saw a decline [3][4]. Price and Inventory Outlook - The report anticipates that the industry will see a stabilization in prices, with Moutai's price expected to maintain above 1600 RMB due to improved channel confidence and reduced supply-side pressure [2][3]. - Many brands have reached a price floor, limiting further downward adjustments, and the upcoming festival periods are expected to provide additional sales opportunities [8][9].

Summary of Conference Call on Baijiu Industry Performance During Spring Festival Industry Overview - The overall sales volume is expected to decline by approximately 10%, with a price factor contributing to a decline of 15-20%, which is slightly better than expectations. High-end and mass-market segments performed better than anticipated [1][2] Key Insights - **High-End Segment**: - Brands like Moutai and Wuliangye showed significant demand elasticity post-price reduction, stimulating mass consumption and compensating for the lack of political and business gifting scenarios. Additionally, the demand for gifts, which was suppressed by the alcohol ban, saw some release during the Spring Festival [1][2] - **Mass-Market Segment**: - Brands such as Jinshiyuan benefited from the extended holiday, leading to increased social gatherings and drinking events [1][2] - **Moutai**: - Sales volume exceeded expectations, with a 20% increase in offline channel sales during the Spring Festival. The iMoutai platform saw over 30% growth in product availability. The surge in demand for scattered Moutai during the holiday was attributed to most stockpiling being completed ahead of the holiday. It is expected that Moutai's task completion rate for January-February will reach 45%, which is 10 percentage points faster than previous years, with a first-quarter target of 50%. Current inventory is nearly zero, providing a solid foundation for maintaining high prices, although non-standard series products have seen a significant decline in volume (20-30% year-on-year) [2][3] - **Wuliangye**: - The price remained robust, with a 20% year-on-year increase in sales during the Spring Festival, surpassing levels from 2024. Concerns regarding Moutai's price drop affecting Wuliangye's market share were not significant due to differing consumption scenarios. Wuliangye's price reduction has also exerted some pressure on other products in the same price range, but sales slightly exceeded expectations [2][3] - **Jinshiyuan**: - Sales slightly exceeded expectations, with feedback from Jiangsu indicating high single-digit growth during the Spring Festival, primarily driven by the Danyan (16% growth) and V3 (10% growth) products. Other products like Guoyuan's third and fourth generations saw slight declines. The strong performance was attributed to robust consumer demand for gifting and self-consumption, with a shift from group purchases to retail channels. Current cash return is at 38%, with an expected 40% for the first quarter; inventory is at over four months, and it is anticipated that inventory levels will remain relatively high to maintain market share [3] Investment Perspective - Despite a high base, sales during the Spring Festival showed resilience, indicating a clearer demand bottom. With manufacturers actively reducing supply, price floors are becoming evident. Looking ahead, the first-quarter reports will clarify the annual low point, and there is potential for a rebound as high-end consumption shows signs of recovery, suggesting that the baijiu market will not be absent from this trend [3][4] Recommendations - The top recommendation is Moutai due to its strong fundamentals, followed by Wuliangye, Shanxi Fenjiu, Jinshiyuan, and the flexible Luzhou Laojiao [4]

Group 1 - Industry Investment Rating: Buy [2] - Previous Rating: Buy [2] - Report Date: February 24, 2026 [2] Group 2 - Core Viewpoint: The report summarizes feedback from six liquor distributors across five provinces regarding the sales performance of liquor during the Spring Festival, indicating a narrowing decline in sales of famous liquor compared to the Mid-Autumn Festival. The C-end scenarios, such as banquets, performed well with an upgrade trend, while B-end scenarios are still recovering [6][9][14] - Feedback from Henan liquor distributors indicates that Moutai and Wuliangye are leading in sales, with Moutai's return rate exceeding 35% and Wuliangye's at 30%. There is a trend of consumers concentrating on famous liquor across different price ranges [6][9] - In Shandong, Fenjiu is performing well in the mid-range segment, with a reported sales growth of approximately 8% during the Spring Festival [10] - In Anhui, the wedding market showed strong performance, particularly in the 200 CNY price range, which is experiencing growth [11] - Jiangsu distributors reported a mixed performance, with strong sales at both ends of the market but weakness in the mid-range, indicating a systemic price-driven volume increase [13] - In Sichuan, overall sales volume is expected to decline by 8% and sales amount by 15%, with personal and gift consumption performing better than expected [13] Group 3 - Investment Recommendations: For liquor, the sector is expected to enter a new development cycle in 2026 after four years of adjustment. Key recommendations include Luzhou Laojiao, Shanxi Fenjiu, Shede Liquor, Guizhou Moutai, Jianshe Liquor, and Gujing Gongjiu. For consumer goods, the industry is expected to see a moderate price increase in 2026, with opportunities in new products and channels. Key recommendations include Anjoy Food, Lihua Food, Angel Yeast, Yanjing Beer, Qianhe Flavor Industry, Dongpeng Beverage, New Dairy, Guoquan, and Tianwei Food [14]

Investment Rating - The report rates the industry as "Buy" [5] Core Insights - The 2026 Spring Festival consumption exceeded expectations, with service consumption leading the growth, driven by a significant increase in dining and travel demand [2][7] - The report highlights a notable recovery in the travel sector, with an expected total of 9.5 billion people traveling during the Spring Festival, marking a historical high [10][12] - The report emphasizes the importance of quality and experience in consumer spending, with a shift towards premium products and services [7][19] Summary by Sections 1. Spring Festival Consumption Trends - The Spring Festival holiday from February 15 to 23, 2026, saw a "good start" in consumption, with key retail and dining enterprises reporting a 10.6% increase in average daily sales compared to the same period in 2025 [10][22] - The first four days of the holiday recorded an 8.6% increase in average daily sales for key retail and dining enterprises compared to the previous year [10][19] - Government initiatives, including a 20.5 billion yuan fund for consumer subsidies, significantly boosted consumer spending [11][10] 2. Baijiu (Chinese Liquor) Market - The Baijiu market showed signs of improvement, with a narrowing decline compared to previous major holidays, although brand differentiation became more pronounced [27][30] - High-end Baijiu brands like Moutai and Wuliangye continued to lead the market, with a focus on price elasticity and rational consumer behavior [27][30] - The report identifies three key changes in the Baijiu market: increased importance of personal consumption, a more relaxed approach from manufacturers regarding sales targets, and improved channel sentiment [30][31] 3. Snack and Food Market - The snack market is expected to benefit from an extended peak season, with a longer preparation and sales cycle compared to 2025 [33][34] - Offline channels, particularly membership-based supermarkets and discount stores, are performing better than online channels, with significant growth in sales during the holiday period [34][35] - The report notes a diversification in snack offerings, with strong performance in high-quality nut gift boxes and innovative packaging strategies enhancing brand visibility [35][36]

Industry Investment Rating - The industry investment rating is "Outperform the Market" and is maintained [2] Core Viewpoints - During the Spring Festival, national catering and retail consumption showed steady growth, with holiday consumption potential continuing to be released. According to the Ministry of Commerce, the average daily sales of key retail and catering enterprises during the first four days of the Spring Festival in 2026 increased by 8.6% compared to the same period in 2025 [5][19] - The performance of Moutai and Wuliangye, as well as some mid-to-low-end price segments, exceeded expectations, while the overall performance of Fenjiu remained stable [15][19] Summary by Relevant Sections 1. Weekly Viewpoints - Moutai and mid-to-low-end liquor sales during the Spring Festival showed growth, while sub-premium liquor continued to face pressure. Moutai's repayment progress slightly exceeded the same period last year, and Wuliangye's repayment progress remained stable [15][6] - The mid-to-low-end liquor segment is expected to achieve double-digit growth during the Spring Festival, while high-end liquor sales are under pressure [15][6] 2. Industry Performance - The food and beverage sector experienced a decline, with the Shenwan Food and Beverage Industry Index (801120.SL) dropping by 2.51% during the week of February 9 to February 14, ranking 29th among 30 Shenwan primary industries [20] - All sub-sectors within the food and beverage industry saw declines, with meat products, health products, and baked goods experiencing relatively smaller drops [20] 3. Key Company Announcements - Luzhou Laojiao announced that the number of restricted stock units eligible for release is 1,962,814 shares, accounting for 0.1333% of the company's total share capital [29] - Miaokelan Duo signed a memorandum with SADAFCO to explore the market for children's cheese snacks in Saudi Arabia [29] 4. Important Industry News - The Ministry of Commerce announced anti-subsidy measures for EU companies, with rates ranging from 7.4% to 11.7%, effective from February 13, 2026 [31] - Kangshifu launched a new product, Kangshifu Ice Red Tea Energy, entering the energy drink market [31] 5. Industry Chain Data Tracking - As of February 10, 2026, wheat prices were 2,510.8 RMB/ton, up 6.45% year-on-year, while pork prices were 18.08 RMB/kg, down 11.63% year-on-year [34][36]

Core Insights - The article discusses the recent trends in the Chinese liquor market, particularly focusing on the retail prices of the top ten liquor products, which showed a slight adjustment after a period of high prices [1][4]. Price Trends - As of February 24, the total retail price for a package of the top ten liquor products was 9,258 yuan, a decrease of 2 yuan from the previous day [1][4]. - Among the top ten products, six saw price increases while four experienced declines. The most notable increase was for the premium Moutai, which rose by 8 yuan per bottle, surpassing the 2,400 yuan mark [1][4]. - Other products that increased in price include Xijiu Junpin (+4 yuan), Guojiao 1573 (+3 yuan), and several others that saw minor increases of 1 yuan [1][4]. - Conversely, the Yanghe Dream Blue M6+ dropped by 10 yuan, marking its fourth consecutive decline, while Feitian Moutai and Gujing Gonggu 20 both decreased by 4 yuan [1][4]. Market Analysis - Major foreign investment banks, including Goldman Sachs, Morgan Stanley, and UBS, have released reports indicating a structural differentiation in the liquor industry due to weak consumption during the Spring Festival and inventory pressures [3][6]. - Goldman Sachs suggests that the liquor industry is more likely to experience a bottoming out rather than a full reversal, with high-end liquor showing relatively stable performance during the Spring Festival [3][6]. - UBS notes that the industry is in a "K-shaped recovery" phase, with Moutai implementing channel and pricing strategies to restore sales, although competition in the high-end segment is intensifying [3][6]. - Morgan Stanley observes that inventory pressures among mainstream liquor companies are easing, and demand from banquet and dining channels is expected to support a sequential improvement in the industry [3][6]. - Overall, foreign institutions believe that the recovery in the liquor industry is characterized by "high-end stability and layered recovery," with a focus on demand improvement and price stability for leading brands in the second half of the year [3][6].

Investment Rating - The report maintains an "Accumulate" rating for the beverage industry, indicating a positive outlook for investment in this sector [1]. Core Insights - The report emphasizes the transition of the brewing industry from a "historical classic industry" to a "traditional advantageous livelihood industry," highlighting its importance in cultural heritage and economic development [4][9]. - The "14th Five-Year Plan" outlines specific goals for the brewing industry, including the establishment of over three trillion-level traditional advantageous wine production areas and more than ten hundred-billion-level specialty brewing industrial parks by 2028 [10][12]. - The report identifies a shift in the industry towards digitalization, green practices, and internationalization, with leading companies actively pursuing these transformations [18][20]. Summary by Sections 1. Development of the Brewing Industry - The brewing industry is recognized as a traditional advantageous industry, playing a crucial role in cultural transmission and regional economic development [9]. - The "Guidance on Quality Improvement and Upgrading of the Brewing Industry (2026-2030)" outlines a clear path for high-quality development, focusing on adapting to market changes [9][10]. - The report details a comprehensive plan with 21 key tasks across seven dimensions, including enhancing raw material supply, promoting technological innovation, and transforming business models [17][18]. 2. Investment Recommendations - The report suggests that while traditional beverages like baijiu, beer, and yellow wine are well-established, emerging categories such as fruit wines and craft beers present new opportunities [21]. - It recommends focusing on companies like Kweichow Moutai, which is expected to stabilize and recover in valuation, along with other notable brands such as Gujing Gongjiu and Luzhou Laojiao [22].

Core Viewpoint - The article highlights the significant increase in demand for Moutai liquor during the upcoming Spring Festival, driven by both B-end (distributors and self-operated stores) and C-end (individual consumers) orders, leading to challenges in supply chain management and logistics [1][3]. Group 1: Market Demand and Supply - The demand for Moutai liquor has surged, with many distributors reporting that they have sold out their January and February quotas before the Spring Festival, even prepaying for part of the March quota [1]. - The average wholesale price for the 2026 version of Moutai is reported to be stable, with prices around 1,700 RMB per bottle for boxed versions and between 1,660 to 1,690 RMB for loose bottles, indicating a price increase compared to previous years [1]. Group 2: Warehouse and Logistics Operations - The "Moutai Shuanglong Warehouse" in Guizhou covers approximately 155 acres and has a total construction area of 108,000 square meters, with a storage capacity of 32,000 tons of finished liquor and over 10.6 million boxes [2]. - The warehouse has seen a doubling of workload compared to previous years, shifting from bulk shipments to handling a large volume of small, immediate orders [3]. - The warehouse employs an automated system for inventory management, utilizing barcode scanning and real-time tracking to ensure efficient sorting and dispatching of products [3][7]. Group 3: Staffing and Operational Adjustments - To cope with the increased workload, the warehouse has expanded its workforce, adding 30 to 40 personnel for B-end orders and over 70 for C-end orders daily [4]. - New shipping warehouses in Nanjing and Beijing have been established to facilitate faster delivery for C-end consumers, significantly reducing delivery times [4]. Group 4: Collaboration with Logistics Partners - Moutai logistics collaborates with JD and SF Express for distribution, with each partner focusing on specific delivery tasks to enhance efficiency [6]. - SF Express has developed customized packaging solutions to prevent damage during transport and has implemented a "consolidation" delivery method for small orders to improve safety and efficiency [6]. Group 5: Retail Experience and Consumer Interaction - The increase in online orders has transformed Moutai's retail stores into crucial points connecting online purchases with offline experiences, leading to a three to fourfold increase in customer traffic [9]. - Retail staff have been adjusted to manage the increased customer volume, with extended operational hours to accommodate the demand [9].

Core Insights - The article highlights the increasing trend of instant retail in the white liquor market during the Chinese New Year, driven by consumer demand for immediate purchases and gifting [1][2][5] Group 1: Market Trends - Instant retail has become the new mainstream for white liquor consumption during the Spring Festival, with platforms like Meituan and Taobao promoting "春节不打烊" (Spring Festival does not close) to capture consumer attention [2][7] - There is a noticeable shift in consumer behavior from "buying in advance" to "immediate needs," indicating a growing demand for quick purchases during festive occasions [5][6] Group 2: Sales Performance - The flagship store of 1919 has experienced a slight increase in sales compared to previous years, with specific brands like Honghua Lang performing particularly well among casual customers [6][7] - Major liquor companies, including Guizhou Moutai and Shanxi Fenjiu, are actively collaborating with retail platforms to leverage the instant retail trend, which has shown significant growth in sales figures [7] Group 3: Consumer Behavior - Customers are increasingly making urgent purchases during meals, with delivery times often within 30 minutes, reflecting the demand for convenience [6] - The store's location in a commercial area has led to a higher demand for white liquor, particularly for business gatherings and gifting [6]