Core Viewpoint - The recent decline in Guizhou Moutai's stock price has raised concerns, with a drop of nearly 13% from its peak of 1645 CNY per share to 1427 CNY within a month, significantly underperforming the Shanghai Composite Index [1][4]. Group 1: Stock Performance and Market Context - Guizhou Moutai's stock has experienced a prolonged weak performance since reaching a historical high of 2400 CNY in early 2021, with a decline of over 40% from that peak [3]. - In the context of rising valuations for many leading companies in China, Moutai's performance has been disappointing, leading to feelings of disillusionment among investors [4]. Group 2: Policy Impact on the Industry - A recent policy change prohibits the provision of alcoholic beverages, including Moutai, at official government meals, which has significantly altered market expectations for future white wine consumption [6][7]. - The strict enforcement of this ban has intensified downward pressure on white wine stocks, despite a reduced reliance on government consumption by leading companies [7][8]. Group 3: Sales and Pricing Trends - The white wine sector has seen a notable decline in sales, with Moutai's stock price dropping 12.56% over the past 20 trading days, alongside significant declines for other major brands [9]. - Recent data indicates that the wholesale price of Moutai has been on a downward trend, with the original box price falling to 2025 CNY per bottle and the scattered bottle price dropping to 1960 CNY, marking a decline of over 12% compared to early 2024 [11][13]. Group 4: Inventory and Market Dynamics - Current estimates suggest that Moutai has a social circulation inventory of approximately 120 million bottles, with additional production capacity expected to add 130 million bottles, leading to increased inventory pressure on distributors [16]. - Reports indicate that since early 2024, distributors have shifted to a negative price outlook for Moutai, exacerbating inventory challenges [17]. Group 5: Changing Consumer Preferences - The white wine industry is facing a generational shift in consumer preferences, with younger consumers showing a marked decline in interest in traditional white wine, which is now viewed as a luxury item of the previous generation [25][32]. - Data shows that only 13% of young consumers prefer white wine, with a significant generational gap in consumption patterns, as younger demographics increasingly favor alternative beverages [25][28]. Group 6: Industry Evolution and Future Outlook - The white wine industry has undergone significant changes over the past two decades, evolving into a mature market characterized by a strong competitive landscape [23]. - Despite attempts by companies like Moutai to innovate and adapt to changing consumer preferences, such as launching new products, these efforts have not yielded significant success [29][30].

Core Viewpoint - The recent decline in Kweichow Moutai's stock price has raised concerns, with a drop of nearly 13% from its peak of 1645 CNY per share to 1427 CNY, significantly underperforming the Shanghai Composite Index [1][3][4] Group 1: Stock Performance - Kweichow Moutai's stock has been in a weak downward trend for over four years since reaching a historical high of 2400 CNY in early 2021, with a decline of more than 40% from that peak [3][4] - The overall performance of the liquor sector has been poor, with Kweichow Moutai and other leading liquor companies experiencing significant declines in stock prices, with Moutai down 12.56% over the past 20 trading days [10][11] Group 2: Policy Impact - A new regulation effective from May 18, 2025, prohibits the serving of liquor at official meals for civil servants, which has drastically changed market expectations for future liquor consumption [6][7] - Despite a reduced reliance on government consumption, the loss of this segment is expected to impact broader business and social dining scenarios [8][9] Group 3: Market Dynamics - The liquor industry is facing a contraction in consumption scenarios, exacerbated by the new regulations, leading to a significant drop in wholesale sales [10][12] - Kweichow Moutai's wholesale prices have been declining, with the price for a case dropping to 2025 CNY and for individual bottles to 1960 CNY, marking a decline of over 12% compared to earlier this year [14][16] Group 4: Inventory and Supply - Current inventory levels for Kweichow Moutai are substantial, with approximately 120 million bottles in circulation and production capacity expected to add another 130 million bottles, indicating a potential oversupply [17] - Reports indicate that the liquor wholesale price index has been below 100 since last year, with a 12.5% year-on-year decline in production as of March [18][20] Group 5: Consumer Trends - The younger generation shows a declining interest in traditional liquor, with only 13% of young consumers preferring liquor over other beverages, leading to a significant generational gap in consumption [26][30] - New consumption trends favor lighter beverages and experiences, with younger consumers increasingly gravitating towards products that align with their lifestyle preferences [28][29] Group 6: Industry Evolution - The liquor industry has matured over the past two decades, transitioning through various phases, and is now characterized by a strong competitive landscape [24][25] - Despite attempts by liquor companies to innovate and adapt, such as Kweichow Moutai's forays into cross-industry products, these efforts have not gained significant traction [31][32]

Core Insights - The 2025 "618 Shopping Festival" started on May 13 and will last until June 18, marking the longest duration in its history, aimed at stimulating consumer spending [1] - Despite a pessimistic outlook for the liquor market in 2023, data from e-commerce platforms during the 618 period shows strong sales momentum for alcoholic beverages [1][2] - The sales of liquor products on platforms like Tmall and Meituan have seen significant year-on-year growth, with Tmall's core liquor brands increasing by 72% in the first phase of the event [1][2] E-commerce Performance - From May 13 to May 26, Tmall's liquor sales saw a 72% increase compared to the same period last year, with domestic liquor, wine, and yellow wine all achieving double-digit growth [1] - Meituan's flash sales reported a nearly 19-fold increase in liquor sales, with over 50 categories of products, including liquor, experiencing over 100% growth compared to last year [1][2] - Live streaming has significantly boosted liquor sales, with Tmall's liquor live streaming sales increasing by 20% year-on-year, and wine live streaming sales soaring by 108% [1] Pricing Strategies - The competitive pricing during the 618 event has contributed to the strong sales, with notable discounts on premium liquor brands [2][4] - For instance, Moutai 1935 was priced below 800 yuan on various platforms, while Guojiao 1573 was available for as low as 773 yuan per bottle, making them attractive to consumers [2] - Despite the discounts, liquor companies are managing their pricing strategies to avoid disrupting the overall pricing system for distributors [4][5] Market Dynamics - The liquor industry is facing challenges with price inversions, where retail prices are lower than distributor prices, affecting profitability for offline retailers [5][6] - In 2025, liquor companies have adopted a "control inventory and maintain prices" strategy, with several brands issuing stop-sale notices to stabilize prices [5][8] - The offline retail market has not been significantly impacted by the online promotions, as many stores did not engage in similar discounting activities [6][7] Industry Outlook - Major liquor companies, including Moutai and Wuliangye, have adjusted their revenue growth targets downward, indicating a cautious outlook for the industry [8] - The ongoing competition from online channels continues to pressure traditional retail margins, as consumers have more options and price comparison capabilities [6][8]

Core Insights - The report indicates that the increase in investment hotspots has weakened the performance of consumer stocks in China [1] - The consumer sector is experiencing slow growth, with a lack of fundamental catalysts in the short term, although long-term asset revaluation logic remains intact [8] Industry Overview - In April 2025, five out of eight tracked industries maintained positive growth, while two experienced negative growth and one remained flat. The industries with single-digit growth included dairy (+3.4%), dining (+3.1%), soft drinks (+2.7%), condiments (+2.3%), and frozen foods (+1.5%). The declining sectors were mass-market and below liquor (-10.7%) and mid-to-high-end liquor (-1.5%), with the beer industry remaining flat [3][10] - The revenue for the high-end liquor sector in April was 26.4 billion yuan, down 1.5% year-on-year, while the cumulative revenue for the first four months was 167 billion yuan, up 0.3% year-on-year [12] - The mass-market liquor sector saw a revenue of 15 billion yuan in April, down 10.7% year-on-year, with a cumulative revenue of 75.2 billion yuan for the first four months, down 13.9% year-on-year [13] - The beer industry reported a revenue of 14 billion yuan in April, remaining flat year-on-year, with a cumulative revenue of 60.6 billion yuan, showing a slight decline of 0.2% [14] Price Trends - In April, the wholesale prices of high-end liquor such as Feitian Moutai continued to decline, with prices for whole boxes and individual bottles down by 70 yuan compared to the previous month [4][22] - The prices of most high-end liquor remained stable, while mid-range and lower-end liquor prices saw more declines than increases [12][13] Cost Analysis - The cost indices for various products in April showed increases for beer (+2.69%), frozen foods (+1.67%), dairy (+1.09%), while condiments (-0.12%), instant noodles (-0.18%), and soft drinks (-1.58%) experienced declines [5] - The prices of packaging materials varied, with aluminum can prices rising by 8.37% year-on-year, while glass, plastic, and pulp prices fell by 23.17%, 20.90%, and 4.59% respectively [5] Investment Recommendations - The report suggests waiting for the right opportunity to increase positions in consumer stocks, particularly in the dairy sector, soft drinks, and liquor, with specific companies highlighted for potential investment [8]