Core Viewpoint - The market atmosphere during the "Double Festival" is relatively flat, with a significant reduction in the traditional "peak season effect" [1][2] Sales and Pricing - Overall sales of liquor are expected to decline by 20%-30% during the Mid-Autumn Festival and National Day, aligning with pre-festival expectations [2] - Terminal sales showed a mild month-on-month recovery in September, but remain under pressure; wholesale prices have decreased year-on-year, leading to a contraction in channel profits [1][2] - High-end liquor prices are stabilizing after a decline, with brands like Moutai and Wuliangye showing signs of recovery in pricing [5][7] Inventory and Channel Dynamics - Distributors are facing increased inventory levels due to sluggish sales in Q2 2025, with pre-festival stocking leading to a temporary rise in inventory [1][2] - Despite a slight reduction in inventory during the festival season, it is expected that real estate liquor distributors will still hold high inventory levels [1][2] Regional Performance - There is a notable regional differentiation in sales performance, with high-end brands and regional leaders showing resilience, while mass-market products face challenges [3][4] - In Jiangsu, urban banquet sales are stable, while rural markets show weakness; in Henan, the mass-market price segment is becoming the main sales driver [3] - In Sichuan, demand for mid-range products is under pressure in urban areas, while county markets show stable performance for products priced between 300-500 yuan [3] Consumer Behavior - The consumption trend is shifting towards rationality, with stable performance in essential consumption scenarios like banquets and family gatherings, while business and government consumption remains weak [4] - The 100-yuan price segment is becoming the main sales driver, with high-cost performance products gaining popularity in regions like Henan and Shandong [6] Investment Recommendations - The company suggests that with the upcoming Q3 earnings disclosures, risks may be fully released, and the sentiment in the liquor sector may see a recovery [7] - Specific stocks to watch include those with strong elasticity in policy expectations and consumer recovery, such as Guizhou Moutai and Shanxi Fenjiu [7]

Investment Rating - Industry Rating: Outperform the market (maintained rating) [6] Core Insights - The overall sales of liquor during the Mid-Autumn Festival and National Day are expected to decline by 20%-30%, aligning with pre-festival expectations due to the impact of the "ban on alcohol" in May [2] - High-end liquor brands are showing resilience, while the mass market is under pressure, with a notable shift towards lower-priced products in certain regions [3] - The market is characterized by "overall pressure with regional differentiation," where high-end and regional leading brands perform better compared to mass-market products [3] - The price of high-end liquor is stabilizing after a decline, with notable brands like Moutai and Wuliangye showing recovery in prices [4] Summary by Sections Sales Performance - Sales during the double festival period are under pressure, with a slight recovery in terminal sales observed in September, but overall sales remain constrained [2] - Inventory levels among distributors are high due to sluggish sales, leading to cautious payment collection [2] Regional Analysis - Jiangsu: Stable sales in urban areas, but rural markets are struggling [3] - Henan: Lower-priced products are becoming the main sales drivers due to changing consumer perceptions [3] - Sichuan: Differentiated performance in urban and rural markets, with rural areas showing resilience [3] - Shandong: Sales are influenced by promotional activities, but overall market sentiment is weak [3] Pricing Trends - High-end liquor prices are stabilizing after a decline, with Moutai's price around 1760 yuan [4] - Strong brand power is crucial for performance, with brands like Jiu Gui and Jian Nan Chun showing better resilience [4] Investment Recommendations - The report suggests that with the upcoming Q3 earnings disclosures, risks may be fully released, and the sector could see a recovery in sentiment [5] - Key investment lines include: 1. High elasticity stocks under policy expectations: Jiu Gui, She De, Shui Jing Fang, Lao Jiao, Hua Zhi [5] 2. Stocks benefiting from consumer recovery: Gu Jing Gong Jiu, Ying Jia, Jin Si Yuan [5] 3. Strong alpha stocks: Moutai, Fen Jiu [5]

Core Viewpoint - The decline of the real estate industry in China has significantly impacted the high-end liquor market, leading to a need for transformation and new consumption drivers in the liquor sector [1][4][7]. Group 1: Real Estate and Liquor Industry Interconnection - The real estate sector's growth has historically driven the high-end liquor market, with a notable increase in business-related consumption [2][4]. - From 2004 to 2013, real estate investment surged over 520%, while the liquor industry experienced a "golden decade" with production up 293%, revenue up 719%, and profits soaring 1272% [5]. - The collapse of major real estate companies like Evergrande and the subsequent economic downturn have led to a significant decline in the liquor industry, which is now facing intense competition and adjustment [7][8]. Group 2: Current State of the Liquor Industry - As of early 2025, the number of large-scale liquor enterprises has decreased to 887, with a slight revenue increase of 0.19% but a significant profit drop of 10.93% [8]. - Major liquor companies have initiated strategic transformations, focusing on new consumer demographics, international markets, and affordable product lines to adapt to changing market conditions [10][11][12]. Group 3: Strategic Transformations in the Liquor Industry - Companies like Moutai are targeting new consumer groups in emerging industries and enhancing personalized service offerings [10]. - The liquor industry is also expanding its international presence, with initiatives aimed at promoting Chinese liquor globally [10]. - There is a growing emphasis on affordable products, with several brands launching new offerings to capture the mass market [11][12]. Group 4: Future Outlook and Challenges - Despite initial successes in transformation, the liquor industry faces ongoing challenges, including the need to find new consumption drivers to replace the real estate sector [14]. - The export market for Chinese liquor is still in its infancy, and the profitability of mass-market products lags behind that of premium offerings [14].