Core Viewpoint - The Chinese liquor industry is facing significant challenges in sales performance, particularly due to the impact of the "ban on alcohol" and seasonal consumption declines, with some regions experiencing sales drops exceeding 50% in June [1] Industry Summary - The Shanghai Composite Index rose by 0.20% to 3567.02 points, while the liquor sector closed at 2170.73 points, slightly down by 0.01% [1] - Among 14 liquor stocks, Kweichow Moutai saw a minor increase of 0.07%, closing at 1417.97 CNY per share, while Wuliangye and Yanghe both experienced slight declines [1] Sales Performance - According to a report from Zheshang Securities, the sales performance of liquor is under pressure, particularly in Q2 2025, with June sales significantly affected by the "ban on alcohol" [1] - Reports indicate that high-end liquor sales in instant retail have declined by approximately 15%-20%, while mass retail and group purchasing have seen declines of around 30% [1] - The most affected price range is between 300-800 CNY, with sales of products priced above 500 CNY experiencing severe downturns, nearly ceasing to move [1]

Investment Rating - The investment rating for the food and beverage industry is "Outperform the Market" [4][5][80]. Core Views - The industry is entering the mid-year performance reporting period, with a focus on structural opportunities within the sector [11]. - The liquor segment is experiencing slight price declines for high-end products during the off-season, with attention on mid-year performance [12][13]. - The beer and beverage sectors are entering a peak season, with stable performance from leading companies in basic condiments [14][15]. - The report emphasizes the importance of consumer engagement and market health for liquor companies, with a shift towards internationalization and youth-oriented strategies [13][19]. Summary by Sections Liquor - The high-end liquor prices have slightly decreased, with a focus on mid-year performance [11]. - Major companies like Kweichow Moutai and Wuliangye are expanding their cultural and consumer engagement strategies [11][12]. - The report suggests three investment themes: resilient market leaders, companies showing digital transformation benefits, and those with market share growth potential [13]. Consumer Goods - The beer sector is seeing a slight decrease in fund holdings, with a focus on Yanjing Beer for internal reforms [14]. - The snack sector has seen an increase in fund holdings, particularly in Yanjing and Wancheng Group [15]. - The condiment sector is expected to perform steadily, with a focus on mid-year performance windows [16]. Frozen Foods - Companies are actively developing new products during the off-season, benefiting from industrialization trends [17]. Dairy Products - The dairy sector is experiencing a stable recovery in demand, with supply adjustments leading to improved conditions for 2025 [18]. Beverages - The beverage sector is entering a peak season, with significant performance differentiation among leading companies [19].

Industry Environment - The Chinese liquor industry is undergoing significant adjustments in the first half of 2025, characterized by declining volume and price, significant policy impacts, and a trend towards lower-quality products [3][4] - The market is seeing a rise in light bottle products, reflecting a trend of consumption downgrade, while the price inversion phenomenon is prevalent, indicating severe supply-demand imbalance [3][4] - The industry is focusing on high-quality development, with an emphasis on product innovation and sustainable practices as it seeks breakthroughs amid challenges [3][4] Market Trends - Small capacity (50ml-250ml) and large bottle (1L and above) products are gaining traction in the liquor market, with small bottles appealing to younger consumers through innovative marketing [5] - Major liquor brands are competing for the young market by launching low-alcohol products, with a significant potential consumer base of 490 million aged 18-30 contributing over 400 billion yuan in market size [6] Performance Insights - The white liquor industry is experiencing a downturn, with several listed companies issuing profit warnings, while the beer sector is witnessing growth due to consumption recovery and cost reductions [7] - The domestic whiskey market is facing a selling frenzy, with prices dropping significantly below market value due to weakened consumer demand and increased channel pressure [8] Brand Dynamics - Tibet Development Co. plans to acquire a 50% stake in Lhasa Beer from Carlsberg, which could enhance its asset integrity and operational capabilities [9] - Yanghe's collaboration with the Scottish Premier League has led to the launch of a football-themed product, enhancing brand engagement through cultural integration [10][11] - Water Well's sales volume increased by 14.54% in the first half of 2025, attributed to its focus on mid-to-high-end products and effective inventory management strategies [17] Strategic Developments - Moutai is establishing a technology research institute to enhance innovation in the liquor industry, focusing on biochemistry and fermentation optimization [20] - The introduction of a 1L bottle of Moutai through the "i Moutai" platform reflects a strategic shift towards consumer-centric approaches and packaging upgrades [21][22] - The rise of light bottle products in the market, with brands like Yanghe leading the charge, indicates a shift in consumer preferences towards high-quality, affordable options [23] Consumer Engagement - The collaboration between Baidonglai and Jiu Gui Jiu aims to connect with younger consumers through cultural narratives and quality experiences [24] - The launch of new wedding-themed products by Congtai Distillery targets the high-end wedding market, leveraging cultural elements to enhance brand positioning [25] - The success of Red Label Jin Jiu, which saw a 50% growth in sales, highlights the effectiveness of innovative marketing strategies in attracting new consumer segments [26]

Investment Rating - The report maintains an "Increase" rating for the food and beverage industry, indicating a positive outlook for the sector [5]. Core Insights - The implementation of the childcare subsidy policy is expected to stimulate growth in the food and beverage sector, particularly benefiting the infant formula and dairy product markets [4]. - The report highlights three main investment themes in the liquor segment: strong leading brands, sustained regional advantages, and recovery-driven elastic stocks [1][2]. - In the beer and beverage segment, Budweiser faces sales pressure but is seeing price recovery, while the sugary tea category is gaining market share during peak seasons [3]. Summary by Sections Liquor Industry - Leading brands such as Moutai, Wuliangye, and Luzhou Laojiao dominate the global rankings, with Moutai valued at $58.4 billion, maintaining its position as the most valuable liquor brand globally [2]. - The liquor sector is transitioning from scale growth to high-quality development, with a focus on brand strength and market positioning [2]. Beer and Beverage Sector - Budweiser's Q2 2025 results show a revenue decline of 3.9% and a profit drop of 31.1%, with a notable 6.2% decrease in sales volume [3]. - The sugary tea segment is experiencing a resurgence, with brands like Kang Shifu and Uni-President maintaining leading positions, and sales of Yuanqi Forest's iced tea growing by 53.9% year-on-year [3]. Food Sector - The national childcare subsidy program, effective from January 1, 2025, is projected to enhance birth rates and subsequently increase demand for dairy products [4]. - New product launches by companies like Qiaqia and Ximai are aimed at expanding market presence and tapping into health-oriented consumer trends [4][7].

Investment Rating - The industry rating is maintained as "Positive" [4] Core Views - The report emphasizes the importance of the Mid-Autumn Festival and National Day performance for the liquor industry, recommending strong brand leaders in the liquor sector, particularly in the white liquor category [1][10] - The new consumption trend is expected to continue despite a short-term adjustment, with opportunities for investment in brands that align with rational quality consumption and emotional value [2][24] - The white liquor sector is advised to focus on potential policy catalysts and low-level rebounds, with a cautious assumption of profit bottoms for leading companies [10] Summary by Sections White Liquor Sector - Recommended brands include Guizhou Moutai, Shanxi Fenjiu, and Luzhou Laojiao, with a focus on strong brand momentum and high ROE, dividends, and share buybacks [1][10] - The white liquor sector experienced a decline of 2.40% during the trading period from July 28 to August 1, with specific companies like Zhenjiu Lidu and Gujing Gongjiu facing significant drops [3][30] Consumer Goods Sector - The new consumption sector is undergoing a structural adjustment but remains a key area for investment, with recommended stocks including Weidong Meishi, Wancheng Group, and Yili Group [2][24] - The consumer goods sector saw a mixed performance, with meat products gaining slightly while non-dairy beverages and white liquor faced declines [11][30] Company Updates - Guizhou Moutai is expanding its market presence through partnerships with platforms like Meituan, indicating a strategic move to enhance distribution channels [5] - Jinshiyuan is focusing on national expansion, with a clear three-step plan to establish itself as a leading brand in the high-end liquor market [6][7] Market Data - The report notes that the white liquor price for Moutai remains stable at 1860 RMB per bottle, with similar stability observed in other leading brands [9][47] - The overall valuation for the food and beverage industry is reported at 20.66 times, with the white liquor sector showing a valuation of 18.06 times [35]

Group 1 - The core viewpoint is that the PE recovery in the liquor sector may precede the EPS recovery, with expectations of an EPS turning point in Q2 2026 due to a low performance base [1][4] - The liquor industry is currently undergoing significant changes, including product matrix adjustments, channel upgrades, marketing innovations, and a rational approach to growth targets [1] - The industry is transitioning to a "quality-price ratio" competition phase, with leading companies already positioning themselves for this shift, which is expected to accelerate industry concentration [2] Group 2 - The liquor sector is characterized by low valuations, low expectations, low holdings, and high dividends, with several leading companies offering dividend yields above 4%, indicating relative bottom opportunities [3] - Companies like Yanghe, Luzhou Laojiao, Wuliangye, and Gujing Gongjiu are highlighted for their strong dividend returns, while Kweichow Moutai also maintains a high dividend yield of 3.55% [3] - The focus is on strong brands and resilient demand, with recommendations to pay attention to leading liquor companies that are likely to achieve value re-evaluation as consumer spending gradually recovers [3][4]

Core Viewpoints - The liquor instant retail market is entering a rapid development phase, with significant room for channel penetration. Instant retail is defined as a "supply revolution" driven by consumer lifestyles, transitioning from "selling products" to "selling scenarios" [6][8] - The transformation of liquor channel models is accelerating, making the rapid development of instant retail a necessity. As the competition landscape for liquor stabilizes, consumers are increasingly pursuing price-performance ratios through diversified channels, leading to a contraction in traditional channel profits [7][10] - Liquor companies are actively embracing channel changes and expanding into instant retail and online channels. Instant retail is not just a sales channel but a way for liquor brands to integrate into residents' lifestyles, enhancing consumer engagement [7][10] Market Overview - The liquor instant retail market is projected to reach a scale of 36 billion yuan in 2024, with a penetration rate of approximately 1.8%. The growth potential remains vast, with estimates suggesting the market could reach 60-90 billion yuan by 2030 [6][20] - Instant retail channels are categorized into two main models: platform models that integrate resources (e.g., Meituan Flash Purchase) and self-operated models that maintain strong supply chain control [8][21] - The rapid growth of instant retail channels is driven by changing consumer lifestyles and the need for efficiency, with a focus on enhancing consumer experiences and meeting demand in lower-tier markets [10][20] Industry Opportunities - Instant retail creates opportunities for the liquor industry, such as serving as a trial ground for younger products and facilitating collaboration between liquor companies and platforms to co-create products [8][10] - The traditional profit margins in liquor channels are shrinking, prompting companies to adopt digital management and consumer-centric strategies to enhance efficiency [7][10] - The beer segment, with non-immediate consumption channels accounting for 60%, is also seeing a shift towards instant retail, which helps capture market share in lower-tier cities [10][20] Company Strategies - Major liquor brands are actively recruiting operators on multiple platforms, with companies like Moutai and Qingdao Beer launching new products and innovative sales models [7][10] - Companies are leveraging instant retail to enhance operational efficiency and product innovation, with a focus on high-end product offerings and consumer engagement [8][10] - The collaboration between liquor companies and platforms is expected to foster a more efficient and consumer-oriented sales environment, driving growth in the sector [7][10]

Investment Rating - The report assigns an "Outperform" rating to multiple companies in the consumer staples sector, including Guizhou Moutai, Wuliangye, Luzhou Laojiao, and others [1]. Core Insights - The report highlights that most baijiu wholesale prices have stabilized, with specific price changes noted for various brands. For instance, the price of Feitian Moutai (case) is 1915 yuan, down by 35 yuan from the previous month, and down 665 yuan year-on-year [3][9]. - Discounts on liquid milk and beer have decreased compared to previous months, indicating a shift in pricing strategies within the consumer goods market [5][22]. Summary by Sections Baijiu Pricing - Guizhou Moutai's prices for different products have shown a decline, with Feitian Moutai (case) at 1915 yuan, down 35 yuan month-on-month and 665 yuan year-on-year [3][9]. - Wuliangye's eighth-generation price is 930 yuan, stable compared to last month and unchanged year-on-year [4][9]. - Luzhou Laojiao's Guojiao 1573 remains at 860 yuan, unchanged from last month and down 40 yuan year-on-year [4][9]. Consumer Goods Discounts - The average discount rate for liquid milk has decreased to 79.1% from 73.8% at the end of June, while the median discount rate increased to 80.3% [5][22]. - Beer discounts have also seen a slight increase, with average and median rates at 83.6% and 87.0%, respectively, compared to 81.1% and 84.6% in late June [5][22]. - Discounts for infant formula and instant foods have remained stable, with average rates at 93.0% and 94.3%, respectively [7][22].

Core Viewpoint - The Fenyang Fenjiu 2030 technological transformation project aims to significantly enhance the production and storage capacity of the company, reinforcing its leadership position in the domestic liquor industry with a total investment of 9.1 billion yuan [1][2]. Group 1: Project Overview - The project is located in the Fenyang Xinghua Village Economic and Technological Development Zone, covering an area of 1,716 acres, and is described as a "super aircraft carrier" in the liquor industry with a total investment of 9.1 billion yuan [1]. - Upon completion, the project will achieve an annual production capacity of 51,000 tons of raw liquor and a storage capacity of 134,400 tons, contributing to the formation of a liquor industry cluster [2]. Group 2: Technological and Structural Aspects - The project emphasizes technological innovation and green development, establishing a complete industrial chain that includes raw material processing, brewing production, storage allocation, and supporting guarantees [2]. - The construction includes various facilities such as grain cleaning, storage silos, brewing workshops, and wastewater treatment stations, with 20 main construction units currently in the main construction phase [2]. Group 3: Economic and Social Impact - The project is a key part of the Luliang Municipal government's initiative to promote the "985" key industrial chain, focusing on upgrading the liquor industry and optimizing the regional economic structure [3]. - It is expected to create numerous job opportunities in Fenyang City, leading to both economic and social benefits [3].

Investment Rating - The investment rating for the food and beverage industry, specifically for alcoholic beverages, is "Outperform the Market" [1]. Core Insights - The alcoholic beverage instant retail sector is entering a rapid development phase, with significant room for channel penetration. Instant retail is defined as a "supply revolution" and "efficiency revolution" driven by consumer lifestyles. Major platforms are increasing capital investment, suggesting a new development stage for local living, with instant retail platforms likely transitioning from "selling products" to "selling scenarios" [3][11]. - The market size for alcoholic beverage instant retail is projected to reach 36 billion yuan in 2024, with a penetration rate of approximately 1.8%. By 2030, the market could expand to between 60 billion and 90 billion yuan, driven by both supply and demand [3][17]. - The current instant retail channels are categorized into two models: platform models that integrate resources and self-operated models that maintain strong supply chain control [3][19]. - Alcoholic beverage companies are actively embracing channel transformation, with a focus on instant retail and online channels. This shift is seen as a crucial attempt for brands to integrate into consumers' lifestyles [3][4]. Summary by Sections 1. Development of Alcoholic Beverage Instant Retail - Instant retail is creating "all-weather scenarios" for consumers, accelerating supply-side development [7][11]. - The demand for alcoholic beverages in instant retail is increasing, particularly during nighttime hours, with younger consumers driving this trend [11][12]. 2. Necessity of Channel Transformation - The transformation of alcoholic beverage channels is deemed inevitable due to changing consumer lifestyles and the need for supply chain efficiency [3][31]. - The competition landscape for white and beer products is stabilizing, with consumers forming brand loyalty [3][4]. 3. Potential Opportunities and Highlights - Instant retail channels provide a testing ground for younger products, allowing companies to innovate with lower costs and better data feedback for product development [5][27]. - The shift towards high-end products in the beer sector is facilitated by instant retail, which allows for rapid turnover and the introduction of craft and fresh beer products [5][41]. 4. Accelerated Layout of Instant Retail Channels - Alcoholic beverage companies are increasingly investing in instant retail channels, viewing them as essential for integrating into consumer lifestyles [3][4]. - Companies like Moutai and others are actively recruiting operators on platforms like Meituan and Douyin to expand their consumer base [3][4]. 5. Profit Forecast and Investment Recommendations - Short-term impacts of instant retail on the competitive landscape of white and beer products may be limited, but long-term opportunities exist for companies that adapt to channel changes [4][5]. - Recommended stocks include Shanxi Fenjiu, Luzhou Laojiao, Guizhou Moutai, Yanjing Beer, and Chongqing Beer [4].