A report from CMSC indicates that overall, the number of enterprises and participants at the 2026 Spring Sugar & Wine Fair was lower than in previous years. The focus of companies has shifted more from competing for channel traffic to user operation and cultivation. Within the Baijiu sector, sales divergence has intensified, while wholesale prices have stabilized. Distributor sentiment is cautious but calm. 2026 may become a mid-term examination year for the industry. In the first half, the focus will be on inventory reduction by distilleries and the restoration of channel profits; companies that adjust first may see marginal improvements in the second half of 2026. In the latter half, industry competition will gradually evolve from channels to the consumer end, placing greater emphasis on building and perfecting consumer cultivation systems to seize the initiative in the next cycle. In the consumer staples sector, the catering chain showed clear improvement in Q1 2026, dairy products saw slight growth, while beverages and snack retail maintained their momentum. The main views of CMSC are as follows:
The industry is still searching for a bottom, with a subdued atmosphere perceived at the Spring Sugar & Wine Fair. The number of participating enterprises and personnel at the 2026 event was lower than usual. Companies like Moutai Group and Luzhou Laojiao cancelled their hotel exhibitions, while Wuliangye and Shanxi Fenjiu cancelled their distributor conferences. The industry's focus has shifted from competing for channel traffic to C-end user operation and repurchase cultivation. Leading companies are increasingly concentrating their efforts on precise matchmaking at the main venue, consumer experience, and brand value communication.
Baijiu Sector: Intensified sales divergence, stabilized wholesale prices, cautious but calm distributor sentiment. Overall, the baijiu industry is still in a bottoming process, but positive signals for sales from leading distilleries are gradually appearing. Moutai has stabilized first, and Wuliangye is expected to follow. Post-holiday demand has normalized, but wholesale prices have shown some resilience. Considering that wholesale prices for many distilleries have already undergone deep corrections with limited room for further decline, 2026 is anticipated to be a year of price stabilization. Except for a few companies, major distilleries have begun active or passive destocking. Distributor inventory is gradually entering a normal range, although non-distributor channel burdens for some companies still need to be cleared. However, it is clear that the size of these burdens is no longer increasing but decreasing. 2026 will be a period of industry bottoming. The first half will focus on inventory reduction by distilleries and the restoration of channel profits; companies that adjust first may see marginal improvements in H2 2026. The latter half will see industry competition gradually evolve from channels to the consumer end, with increased attention on building and perfecting consumer cultivation systems to seize the initiative in the next cycle.
Consumer Staples Sector: Catering chain improvement, slight dairy growth, sustained beverage and snack retail momentum. Looking at specific segments: 1) Catering Chain: Key enterprises saw operational improvements in Q1 2026, with short-term costs already locked in. 2) Dairy Products: Mengniu and Yili achieved single-digit shipment growth in Q1 2026, with positive sales feedback from New Hope Dairy. 3) Beverages: Momentum continues, with leading companies like Dongpeng and Nongfu Spring maintaining steady growth. 4) Snack Retail: Key snack retail stores showed improved same-store sales in Q1 2026, while actively exploring new store formats like convenience stores, thereby promoting expansion into new regions and enhancing growth potential.
Investment Advice: Baijiu bottoming, consumer staples focus on cost transmission. Continued primary recommendations include: 1) Pro-cyclical catering chain improvement (seasonings, beer), focusing on stocks like Haitian Flavouring A+H (stable industry structure, leading competitive advantage, accelerated Q1 performance growth), Yihai International (accelerated H2 2025 performance growth, strong overseas and B-end performance), Yanjing Beer (watch for new products strengthening alpha potential), Tsingtao Brewery A+H, and China Resources Beer. 2) Improved supply and demand in the dairy industry, focus on earnings recovery for leaders; recommend Yili and Mengniu; monitor upstream pasture farm Youran Animal Husbandry. 3) For beverage leaders, continue to recommend Nongfu Spring (2025 performance exceeded expectations, 2026 valuation switch re-enters investment range), monitor China Resources Beverage (improved packaged water landscape + new management). 4) The baijiu sector has returned to a bottom-fishing buying point; after Q1 results expectations are clarified, suppressing factors will be removed. Primarily recommend maintaining sufficient positions in Kweichow Moutai, recommend Wuliangye (rising off-season wholesale prices act as a catalyst), and Shanxi Fenjiu (sales outperform the industry).
Risk warnings: Subsequent sales falling short of expectations, price performance falling short of expectations, intensifying competition risks, rising cost risks, channel survey data may not reflect the overall situation.
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