Core Viewpoint - The food and beverage industry is expected to see improvements in supply and demand dynamics across multiple sub-sectors by 2026, with a clearer recovery trend in CPI, indicating sustained new consumption but with internal rotations. Traditional consumption sectors benefiting from CPI recovery are anticipated to experience bottom improvements, particularly in the mass consumer goods and liquor sectors [1] Group 1: CPI and PPI Trends - The CPI turned positive for the first time in October 2025, showing a month-on-month improvement with November and December CPI at +0.7% and +0.8% respectively, while food CPI was +0.2% and +1.1% [1] - Fresh vegetable and fruit prices have seen significant increases, with November and December fresh vegetable CPI at +14.5% and +18.2%, and fresh fruit CPI at +0.7% and +4.4% [1] - The decline in prices for grains, edible oils, and livestock has narrowed, with November and December grain CPI at -0.4% and -0.3%, edible oil CPI at -1.2% and -1.0%, and livestock CPI at -6.6% and -6.1% [1] Group 2: Liquor Sector Insights - The price of Feitian Moutai has shown signs of recovery, with prices for whole boxes and individual bottles at 1710 and 1660 yuan respectively, reflecting increases of 30 yuan and 10 yuan since January 31 [2] - The demand for liquor is strong due to festive consumption, and the recent price drop has activated potential consumers, leading to improved sales [2] - Moutai's supply chain adjustments and channel reforms are effectively supporting the price stability of its products [2] Group 3: Dairy Industry Developments - The average price of fresh milk in major production areas was 3.04 yuan/kg as of January 29, showing a year-on-year decrease of 2.9% but a month-on-month increase of 0.3%, indicating a strong bottoming signal [3] - The dairy price is expected to enter an upward trend in 2026 due to supply-side adjustments and improved demand driven by demographic policies and product upgrades [3] Group 4: Consumer Goods Price Movements - The frozen food sector is nearing a competitive bottom, with potential demand recovery in 2026 expected to drive fundamental improvements [4] - Leading company Anjijia has begun to recover some promotional policies, which may lead to profit recovery [4] - Three squirrels have raised the ex-factory prices of certain nut gift products, which may alleviate pressures from rising raw material and transportation costs, improving profitability [4]

Investment Rating - The report maintains a "Recommended" rating for the food and beverage industry [1] Core Viewpoints - The supply-demand relationship is expected to improve, with a focus on investment opportunities related to CPI recovery [5] - CPI has shown a positive growth trend since October 2025, with food CPI also reflecting improvements [5] - The report highlights specific sectors such as liquor, dairy, and consumer goods that are poised for recovery [12][14][15] Summary by Sections Supply-Demand Relationship and CPI Recovery - PPI transmission combined with consumer recovery is likely to sustain the CPI improvement trend, with CPI growth recorded at +0.7% in November and +0.8% in December 2025 [5] - Food CPI showed a year-on-year increase of +0.2% in November and +1.1% in December, with fresh vegetable prices rising significantly [5][11] - The report anticipates that the CPI recovery will continue into 2026, driven by PPI improvements and supportive domestic demand policies [5] Sector-Specific Insights - **Liquor**: The price of Feitian Moutai has rebounded, with prices reaching 1710 RMB for whole boxes and 1660 RMB for individual bottles as of February 8, 2026, indicating strong demand during the Spring Festival [12][14] - **Dairy**: The average price of fresh milk has stabilized around 3.04 RMB per kilogram, with expectations for upward movement in 2026 due to supply adjustments and improved demand from demographic policies [14] - **Consumer Goods**: Prices for certain products, such as frozen foods and snacks, are beginning to recover, with companies like Anjijia adjusting promotional strategies to enhance profitability [15] Investment Recommendations - The report suggests focusing on companies within the consumer goods sector, including Dongpeng Beverage, Nongfu Spring, and others, as well as key players in the liquor sector like Guizhou Moutai and Shanxi Fenjiu [21]