Investment Rating - The report maintains an "Increase" rating for the food and beverage industry, indicating a positive outlook for the sector [6]. Core Insights - The beverage sector is currently in its peak season, with a focus on differentiated performance among companies. The report highlights three main investment themes in the liquor segment: leading brands, sustained regional benefits, and recovery-driven stocks [1][2]. - The report notes that the overall retail sales in June grew by 4.8% year-on-year, with the liquor category experiencing a slight decline of 0.7% [2]. - The beer segment faced slight pressure in June, with a year-on-year production decrease of 0.2%. However, the report suggests that the beer market remains in a high-demand season, and emphasizes the importance of focusing on high-growth products and companies [3]. Summary by Sections Liquor Industry - The report discusses the recent channel reforms initiated by Moutai, aimed at stabilizing prices and enhancing regional cultural product development. This is seen as a positive move for the industry, which has been under pressure due to weak consumption and pricing challenges [2]. - Leading liquor companies such as Moutai, Wuliangye, and Shanxi Fenjiu are expected to continue gaining market share, while companies like Jiuzi and Luzhou Laojiao are highlighted as potential recovery plays [1][2]. Beer and Beverage Sector - The beer production data indicates a slight decline, attributed to seasonal factors and market conditions. The report encourages investors to focus on companies with strong product lines and growth potential, such as Yanjing Beer and Zhujiang Beer [3]. - KKR's acquisition of an 85% stake in Dayao is noted, with Dayao being recognized for its established market presence and new product launches [3]. Food Sector - The report highlights the ongoing disclosure of mid-year performance forecasts, with companies like Zhou Hei Ya and Hao Xiang Ni showing improvements in profitability due to operational optimizations [4]. - However, companies like Ganyuan and Qiaqia are facing profit pressures, with significant expected declines in net profits for the first half of 2025 [4].

Core Viewpoint - The acquisition of an 85% stake in Vista International Inc. by KKR through its newly established special purpose company Dynamo Asia Holdings II Private Limited has been approved, marking a significant development for the beverage brand Dayao Soda [1][3][5]. Group 1: Acquisition Details - KKR's acquisition of Vista International Inc. was completed on July 4, 2025, and the transaction involves KKR gaining indirect control over the company, which primarily operates in the beverage sector in China [3][4]. - Vista International Inc. was established in 2024 in the Cayman Islands and is primarily engaged in the beverage business through its affiliates in China [5][8]. - Prior to the acquisition, Vista was fully owned and controlled by a natural person, and post-acquisition, KKR will have sole control over the company [4][5]. Group 2: Market Position and Strategy - In 2024, Vista International is projected to hold a market share of 5% to 10% in China's carbonated beverage market, where Coca-Cola leads with a 60.28% share, followed by Pepsi at 29.37%, and Dayao Soda at 2.42% [8]. - Dayao Soda's core product, Dayao Guest Soda, is recognized as a representative of domestic soda brands, initially focusing on sales in Inner Mongolia [5][8]. - The management team of Dayao Soda has stated that the company's future decisions will focus on long-term brand development and improving consumer offerings, with no changes to their nationalization and youth-oriented strategies [5][8]. Group 3: Company Background - Dayao Beverage Co., Ltd. was established in 2016 with a registered capital of 30 million RMB, and it is fully owned by Dayao Guest Beverage Co., Ltd., which is primarily controlled by Wang Qingdong, the founder and chairman [5][7]. - Despite not having external financing, Dayao has expressed openness to future collaborations with the capital market, although it emphasizes that its primary goal is not to seek funding or valuation [8][9]. - KKR, founded in 1976 and known as one of the "Big Four" private equity firms, has been actively investing in the Greater China region, with over 40 investments in various sectors, including consumer goods [9].

Core Viewpoint - The article discusses the rise of the domestic soda brand "Daiyao" in China, its market penetration, and the ongoing rumors of potential acquisition amidst its peak sales performance. Group 1: Market Position and Sales Performance - Daiyao has reportedly achieved annual sales exceeding 30 billion, surpassing competitors like Beibingyang and Ice Peak, and has carved out a niche in the carbonated beverage market dominated by Coca-Cola and Pepsi [1][2] - The brand has successfully penetrated the dining scene, with over 85% of its sales coming from restaurants, and 78.4% of consumers purchasing Daiyao from dining establishments [3][4] - Daiyao's product design, featuring a larger 520ml bottle that appeals to consumer preferences for volume, has contributed to its popularity in the northern dining market [3][4] Group 2: Marketing and Expansion Strategies - A significant marketing campaign launched in early 2022, featuring celebrity endorsements and extensive advertising across various platforms, marked a turning point for Daiyao's national expansion [6] - The company has diversified its product offerings to include healthier options, such as sugar-free teas and various new beverage types, to cater to changing consumer preferences [6][7] - Daiyao aims to establish a comprehensive product matrix, targeting five major categories: carbonated drinks, fruit and vegetable juices, plant-based protein drinks, energy drinks, and tea beverages [7] Group 3: Competitive Landscape and Challenges - Despite its success, Daiyao faces increasing competition from both traditional beverage companies and new entrants in the market, particularly in the dining sector [8][9] - The brand's pricing strategy has led to some consumer dissatisfaction, as restaurant owners sometimes charge above the suggested retail price, impacting customer experience [9] - The overall carbonated beverage market is experiencing stagnation, with new competitors offering lower prices and higher profit margins, posing a challenge for Daiyao's market share [8][9] Group 4: Future Prospects and Capital Considerations - There are ongoing rumors regarding potential acquisition by private equity firms, which reflects the brand's current challenges in breaking through market ceilings and competition pressures [10] - Daiyao's plans for an IPO to raise $500 million have been denied, but the interest from KKR indicates a significant capital interest in the brand's future [10]