A CITIC SEC report indicates that leading baijiu companies have recently held important meetings, conveying their determination for adjustments, reforms, and channel rebalancing, which is beneficial for the industry's long-term healthy development. Since Q4 2025, leading baijiu enterprises have consistently implemented measures such as controlling shipments, reducing the burden on distributors, and promoting bottle opening and sales to decrease channel inventory. Considering factors including the gradual stabilization of sell-through, the extra day in the 2026 Spring Festival holiday, and various baijiu consumption scenarios during the period, the actual sell-through for baijiu during the 2026 Spring Festival is expected to remain stable, warranting no excessive pessimism. Factoring in the clear subsequent recovery trend, the report expresses optimism about bottom-fishing opportunities in the baijiu sector, highlighting the potential elasticity of leading companies like Wuliangye amid demand recovery. It is projected that the beer industry will experience a mild recovery from its bottom in 2026, with the overall sector showing a trend of stable volume and increasing prices; the report recommends focusing on industry leaders that firmly execute structural upgrade strategies, possess strong channel control, and have brand premium capability. CITIC SEC's main views are as follows: Baijiu: Leaders are accelerating their focus on consumers and actively promoting reforms to existing channels. Since 2026, numerous significant events and changes have occurred, driving channel upgrades and breakthroughs in the baijiu industry. In the short term, leading baijiu companies are actively embracing consumers, with unprecedented focus on consumer outreach and education; mid-tier companies are appropriately reducing prices to maintain market volume-price balance; while tail-end companies are halting production and clearing inventory. Long-term, a "consumer-centric" channel collaboration system is expected to become the core competitiveness in the industry's next cycle, requiring companies to gradually enhance their customer acquisition capabilities, service capabilities, and scenario operation capabilities. Under this new round of market cultivation, the industry as a whole is poised to benefit from the effects of new consumer acquisition and enhanced consumer education. Beer: Structural upgrades continue, with high-quality development driving value growth. According to data from the National Bureau of Statistics, the total output of beer from major enterprises from January to November 2025 was 331.8 million hectoliters, down 0.3% year-on-year, indicating a slight decline in industry output. Industry concentration remains high, with competition gradually shifting focus to the value chain and product quality; the trend towards increasingly diverse consumer preferences and the pursuit of high-quality living imposes higher demands on brand building, scenario penetration, and channel control for brewers. Regarding channels, the food service channel is showing a trend of mild recovery from the bottom, but channel mark-up rates and store acquisition efficiency have not yet returned to pre-pandemic levels; the off-premise channel is still expanding rapidly, with penetration rates for time-sensitive channels like instant retail accelerating. The institution believes the beer industry will experience a mild recovery from its bottom in 2026, presenting a trend of stable volume and increasing prices overall; it recommends focusing on industry leaders that firmly execute structural upgrade strategies, possess strong channel control, and have brand premium capability. Risk factors include: macro consumer demand falling short of expectations; intensified competition in the baijiu and beer industries; market performance of core baijiu product prices falling short of expectations; baijiu industry channel inventory risks; food service consumption recovery falling short of expectations; and food safety issues.
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