Gf Securities released a research report indicating that actively managed equity funds slightly reduced their overweight position in the food and beverage sector during Q1 2026 compared to the previous quarter. The overweight position in the baijiu sub-sector remained largely unchanged. Following a four-year adjustment period, the baijiu sector is projected to enter a new development cycle by 2026. Certain mass-market product segments had already stabilized by 2025. Looking ahead to 2026, industry revenue per ton is expected to experience moderate growth, with promising individual stock opportunities arising from new products and distribution channels. Key viewpoints from Gf Securities are as follows:
The overall allocation to the food and beverage sector continued to decline. Based on data covering all funds, the sector's weighting in top holdings was 5.6% in Q1 2026, down 0.5 percentage points from Q4 2025, resulting in an overweight position of +2.0 percentage points relative to the Wind All Share Index. Analyzing fund types invested in the sector, the proportion of actively managed equity funds increased by 3.3 percentage points quarter-on-quarter to 35.6% in Q1 2026, while the share of passive funds decreased to 57.8%. Specifically, the allocation of actively managed equity funds to the food and beverage sector fell by 0.1 percentage points to 3.9%, with a slight decrease in their overweight position. The overweight position for the baijiu sub-sector was essentially flat.
Holdings in baijiu stocks appear to have bottomed out, while allocations to mass-market products are recovering. Regarding baijiu, fund allocations decreased in Q1 2026. Under the all-funds and actively-managed equity fund metrics, the weighting of baijiu in top holdings changed to 4.5% and 2.9%, respectively, representing overweight positions of +2.1 ppts and +0.5 ppts. Excluding the top four institutional holders, the allocation of actively managed equity funds to baijiu has remained underweight for seven consecutive quarters. Compared to previous cyclical lows in baijiu allocations, the current sector overweight ratio has declined to historically low levels seen under pessimistic scenarios, suggesting potential for significant rebalancing as expectations improve.
For mass-market products, the allocation weighting across all funds increased by 0.06 percentage points to 1.04% in Q1 2026, though the segment remained underweight relative to the benchmark. Holdings increased across major mass-market sub-sectors, including dairy, beer, condiments and fermented products, and comprehensive food companies.
Individual baijiu stock holdings generally declined. Among the top 20 stocks held by all funds in Q1 2026, Kweichow Moutai was the only food and beverage company featured, maintaining its fourth position. When considering only actively managed equity funds, Moutai ranked fifth. Holdings in most individual baijiu stocks decreased quarter-on-quarter, with Wuliangye regaining the second position. Performance among leading mass-market product stocks was mixed. Holdings in companies such as Haitian Flavouring & Food, Anjoy Foods, and Yanjing Beer saw notable increases in both the proportion of fund ownership and the number of funds holding them during Q1 2026.
Risk warnings include uncertain economic recovery, slower-than-expected rebound in consumer spending power, and potential food safety issues.
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