Core Viewpoint - The Ningxia Helan Mountain East Foothill wine region showcased its innovative achievements at the 32nd Yangling Agricultural High-tech Expo, highlighting nearly 50 wine products and related innovations, emphasizing the region's reputation as a "purple business card" of Ningxia [1][2]. Group 1: Product Innovation - The Helan Mountain East Foothill region presented high-quality wine products and innovative wine varieties, such as Beimei and Beixi, along with unique brewing equipment that integrates Chinese culture and Ningxia's terroir [2]. - New projects including flavored wines, sparkling wines, grape coffee wines, and hot wines were featured, attracting attention from numerous visitors, buyers, and industry experts [2]. Group 2: Technological Development - The Helan Mountain East Foothill wine region is recognized as one of the best areas globally for growing wine grapes and producing high-end wines, focusing on high-quality industry development driven by technology [3]. - The Ningxia Helan Mountain East Foothill Wine Industry Technology Collaborative Innovation Center has become the first "open and shared" wine industry technology innovation platform in China, receiving multiple provincial and ministerial innovation accolades [3]. - Research projects on oak barrel alternatives and smart brewing have received support from Ningxia's "project listing" initiative, with results being applied in local wineries to enhance industry quality [3]. Group 3: Talent Development - The region has established a comprehensive training model that integrates projects, disciplines, universities, teams, mentors, and students, successfully enrolling 31 master's and 36 doctoral students in wine-related fields, laying a solid talent foundation for long-term industry development [3].

Core Insights - The report discusses the recent market adjustments triggered by renewed trade tensions, with major A-share indices experiencing declines, particularly in the technology and media sectors, while traditional sectors like banking and coal showed resilience [4] - It highlights the ongoing shift in investment preferences from "old economy stocks" to "new economy stocks," emphasizing the performance divergence between "small growth stocks," "mid-growth stocks," and "old economy stocks" since 2025 [5][6] Market Performance Analysis - In the fourth quarter, a continuation of the pre-holiday style switch is anticipated, with a focus on deep value sectors such as real estate, liquor consumption, and brokerage firms [4] - The report notes that from 2000 to 2015, urbanization and consumption upgrades drove the performance of deep value sectors, benefiting financial and real estate stocks [6] - From 2016 to 2020, growth-driven assets outperformed, marking the rise of the mobile internet and new economy, while deep value sectors faced pressure [7] - Since 2021, technology-led sectors have surged, driven by domestic innovation and competition, particularly in semiconductors and new energy vehicles [8] Sector Rotation Patterns - Historical data indicates that deep value sectors typically see opportunities in the later stages of market cycles, following initial gains in early-cycle and growth-driven sectors [9] - The report outlines a pattern of sector rotation, where technology and growth sectors lead initially, followed by a shift to deep value stocks as market conditions evolve [9][10] Index Structural Changes - The report illustrates significant changes in index compositions over time, with a shift from traditional sectors like banking to new economy sectors such as consumer goods and technology [13][14] - The deep value index has seen a gradual decline in its share, while technology-led components have increased, reflecting the dynamic nature of market preferences [15] Investment Style Evolution - The report emphasizes the transition of investment styles, with deep value ETFs showing strong performance from 2017 to 2021, followed by a plateau, while technology and growth ETFs have gained momentum since 2025 [20][21] - It highlights the cyclical nature of investment styles, with a notable divergence in performance between deep value and growth sectors in recent years [21] International Comparisons - The report draws parallels between the evolution of consumption patterns in Japan and the current trends in China, illustrating how demographic shifts influence market dynamics [30][33] - It discusses the historical context of banking and real estate stocks in various countries, noting their transition from growth-driven to deep value classifications over time [40]

Core Points - The U.S. has confirmed a 15% tariff on all EU goods entering the U.S. market, significantly impacting the EU wine and alcoholic beverage industry [2] - This new tariff replaces a previously proposed 30% punitive tariff, which was seen as a compromise but still worse than expected [2][8] - European producers had hoped for exemptions or a lower rate of 10%, but negotiations for a "zero-for-zero" tariff agreement are ongoing [2][9] Tariff Details - The agreement, finalized on July 27, includes a commitment from the EU to purchase a large volume of U.S. products in exchange for the 15% tariff on most EU goods [5] - Notably, wine and alcoholic beverages are excluded from these exemptions, posing a significant challenge for major producers in France, Italy, and Spain [5][8] - In 2024, the EU's export of alcoholic beverages to the U.S. is projected to reach €9 billion, with wine accounting for nearly €5 billion [5] Economic Impact - The increase in tariffs from 10% to 15% is viewed by many economists as a greater concession from Europe than the benefits gained [8] - The new tariff structure is expected to raise costs significantly, with estimates suggesting a potential 30% increase when factoring in currency fluctuations [11] - Italian wine producers anticipate a loss of €317 million over the next 12 months, with U.S. partners facing potential losses of nearly $1.7 billion [11] Market Challenges - The 15% tariff is likely to lead to higher shelf prices, reduced competitiveness, and a shift in consumer preference towards non-European products [13] - With the sales season approaching, exporters are reassessing pricing, logistics, and marketing strategies to adapt to the new tariff environment [13] - The European Wine Companies Committee (CEEV) is advocating for the inclusion of wine in the ongoing tariff negotiations, emphasizing its importance to both sides [9]

Core Insights - The domestic "self-indulgence economy" shows characteristics of high growth, high valuation, and high differentiation compared to Japanese counterparts, indicating a significant developmental stage difference and valuation premium [2] - Chinese companies are generally in a rapid growth phase with revenue growth rates significantly higher than those of mature Japanese companies, while gross margins are comparable or even superior [2] - The report highlights the need to identify leading companies with competitive advantages to maintain valuation premiums and achieve long-term value creation in a context of intensified competition and slowing growth [2] Section Summaries 01 Japan's Self-Indulgence Consumption Wave - Japan's consumption society has evolved through four stages, reflecting specific economic, social, and cultural contexts, providing a framework for understanding the evolution of the self-indulgence economy [4] - The current transition in China mirrors Japan's historical consumption patterns, positioning it for rapid growth in the self-indulgence economy [4] 02 The Rise of New Consumption in Japan - The emergence of the self-indulgence economy in Japan has been gradual, transitioning from basic needs to a focus on spiritual satisfaction and self-realization [5] - The report discusses the impact of cultural shifts on consumption preferences, particularly among younger generations [5] 03 Development Path and Future Outlook of Domestic Self-Indulgence Consumption - The report outlines four key investment logic areas for the domestic self-indulgence economy: developmental stage advantages, innovative business models, cultural value rediscovery, and technology-driven differentiation [2] - It emphasizes the importance of a core-satellite investment strategy, focusing on leading companies with clear competitive advantages and exploring undervalued quality targets [2] Japanese Self-Indulgence Economy Development - Japanese companies have transitioned from product-oriented to IP-oriented and from manufacturing-driven to culture-driven models, showcasing the importance of brand heritage and innovation [52] - The report provides examples of successful Japanese companies, highlighting their IP value, global presence, and robust profitability [53] Consumer Behavior Trends - The report notes a shift in consumer behavior among Japan's younger generations, moving from seeking social recognition to prioritizing personal satisfaction and identity through consumption [7] - This trend reflects a broader cultural shift towards community-based consumption, facilitated by social media and shared interests [7] Industry Case Studies - Shimano's case illustrates the potential for significant stock price appreciation driven by strong business fundamentals and market positioning, with a notable CAGR of approximately 23.6% over a significant period [57]

Group 1 - The Russian wine industry has experienced a significant opportunity, with sales reaching a 15-year record high last year [1][6] - Global wine production has decreased by 4.8% to 226 million hectoliters, marking the worst result since 1961 due to factors like high temperatures, drought, and reduced market demand [3] - The area of vineyards in Russia has increased, with the total vineyard area exceeding 110,000 hectares, and wine production in January reached 3.4 million liters, an 18% increase year-on-year [4][6] Group 2 - Russia's wine exports have surged, particularly to China, where exports reached nearly 700 tons in the first quarter, a 3.2-fold increase from the previous year [6] - Despite recent successes, the Russian wine industry still has significant room for growth, with the number of producers being much lower compared to traditional wine-producing countries like France and Italy [7] - There is potential for the development of fruit wines and sweet wines in Russia, as many regions are not suitable for grape cultivation, and domestic preferences lean towards sweeter varieties [9][12]

Investment Rating - The report maintains a "Positive" investment rating for the industry [12] Core Insights - Pernod Ricard is a global leader in Western spirits, with a revenue scale second only to Diageo, achieving a fiscal year 2024 revenue of €11.6 billion (approximately ¥88.9 billion) and a CAGR of 4.1% from 2000 to 2024 [7][19] - The company has a diversified brand matrix with 240 brands, including 17 in the top 100 globally, and holds a market share of 8% worldwide, with significant presence in over 160 countries [7][19] - The growth strategy focuses on acquisitions followed by internal cultivation, with a long-term price increase and emphasis on leading brands [7][19] Summary by Sections Company Overview - Pernod Ricard has evolved from a small French aniseed liquor company to the second-largest global spirits company through strategic acquisitions and a decentralized management system [4][9] Historical Development - The company's history can be divided into three phases: pre-2000 focusing on establishing a foundation in France and Europe, 2001-2008 marked by significant acquisitions like Schenley, Allied Domecq, and V&S, and post-2008 focusing on optimizing operations and enhancing high-end brand offerings [8][51] Brand Matrix and Market Position - The brand matrix is comprehensive, covering all major spirit categories, with a strong presence in whisky and vodka, which are the primary revenue sources [24][30] - The company’s market share in whisky is 16.9%, ranking second globally, while vodka and gin also hold significant market shares [30][41] Geographic Distribution - The company has a balanced revenue distribution across regions, with the Americas, Asia, and Europe contributing 28.8%, 42.9%, and 28.3% respectively in fiscal year 2024 [35][38] - The largest markets by revenue are the USA (18.1%), India (12.1%), and France (9.2%) [35][38] Growth Drivers - The growth is primarily driven by internal operations after establishing a solid brand foundation through acquisitions, with a focus on core products and markets [45] - Price increases have been a significant driver of long-term revenue growth, with a CAGR of 4.45% in average price from FY2007 to FY2024 [45]