CITIC Securities has released a research report noting that in the third quarter of 2026, both the scale and proportion of fund holdings in the food and beverage sector stabilized and rebounded. This was primarily because after the technology investment rally cooled in Q3, some capital returned to consumer leaders whose fundamentals had already stabilized and whose dividend returns were attractive.
At the subsector level, the proportion of baijiu holdings increased most notably in Q3, while within mass-market products, dairy holdings rebounded the most. Other subsectors generally saw quarter-on-quarter increases of varying degrees. At the individual stock level, baijiu leaders remained the mainstay of heavy fund positions, with the number of funds holding heavy positions in Kweichow Moutai, Shanxi Fenjiu, and Gujing Gongjiu all increasing, while positions in dairy and foodservice supply chain leaders remained relatively stable.
In terms of investment recommendations, CITIC Securities suggests increasing allocation to leading baijiu companies at the industry bottom. For mass-market products, three main lines are recommended: first, the dimension of competitive improvement; second, the dimension of high dividends; third, the dimension of large health and growth prosperity.
The main views of CITIC Securities are as follows: food and beverage fund heavy positions stabilized and rebounded, but allocation remains at a low level. In Q3 2026, the heavy position scale of active equity funds in food and beverage was 41.2 billion yuan, up 11.4% year-on-year, with a holding proportion of 2.1%, down 2.0 percentage points year-on-year and up 0.6 percentage points quarter-on-quarter. The holding proportion of food and beverage stabilized and rebounded after 11 consecutive quarters of decline. The firm believes this was mainly because the previous capital clearing in food and beverage had been relatively thorough, leaving clean筹码, and as the technology rally cooled from Q3 2026, some capital returned to stable and high-dividend assets. Despite the stabilization and rebound in fund heavy positions, food and beverage overall remains underweight.
Baijiu holdings rebounded the most quarter-on-quarter, while other sectors also received increased allocation. At the subsector level, the fund holding proportion in baijiu rebounded the most, mainly because the baijiu industry has gradually bottomed out from the perspectives of wholesale prices, sales momentum, and inventory. Additionally, baijiu is a large-cap sector, leading companies have strong operational resilience, and current dividend yields are attractive, making it typically the first choice for capital returning to the consumer sector. Among mass-market products, dairy saw a relatively large quarter-on-quarter increase in fund heavy position proportion due to raw milk entering an upward cycle and leading companies' fundamentals expected to improve. Other sectors including condiments, frozen food, and non-dairy beverages all saw slight quarter-on-quarter increases in fund holding proportions. Condiments and frozen food mainly benefited from stable operations of leaders and market expectations of price increases, while non-dairy beverages mainly benefited from increased allocation to high-dividend assets.
Baijiu leaders remain the mainstay of holdings, while dairy and foodservice supply chain leaders have stable positions. At the individual stock level, baijiu leaders still ranked among the top in heavy position market value in Q3 2026, with Kweichow Moutai, Shanxi Fenjiu, and Gujing Gongjiu all receiving increased allocation. For mass-market products, Yili Industrial Group, Anjoy Foods, Angel Yeast, and Haitian Flavouring and Food maintained relatively high holding levels. Although demand in the mass-market products sector came under pressure in Q2 2026 and market confidence weakened, the dairy and foodservice supply chain sectors maintained strong capital absorption capacity.
Risk factors include: downward consumption prosperity; catering recovery falling short of expectations; price increase results falling short of expectations; intensified industry competition; unexpected impact from emerging channels; continued rise in raw material prices; and food safety issues.
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