CGS: New Consumption in Food & Beverage Sector Remains Sustainable, Traditional Consumption Expected to Bottom Out

Stock News2025-12-01

China Galaxy Securities (CGS) released a research report stating that the food and beverage sector index continued to recover in November, outperforming the broader market, driven by shifting market sentiment and positive CPI growth. Within the sector, pre-processed foods, baked goods, and dairy products led the gains. Looking ahead to 2026, the firm's core view is that new consumption trends will persist but rotate internally, while traditional consumption is expected to bottom out and improve.

CGS highlighted the following key insights: 1) **Supermarket Private Labels Drive Alpha, Restaurant Channel Beta Recovery**: The foodservice supply chain faced pressure in 2025 due to subdued demand, but the sector is now bottoming out. In 2026, dual opportunities—alpha from private-label collaborations and beta from restaurant channel recovery—are anticipated. - Private-label partnerships with supermarkets (e.g., Sam’s Club, Hema, Yonghui) are expected to grow 2–3x, creating a market expansion worth ~¥100 billion. Frozen and prepared foods show significant potential. - Restaurant demand is set to recover as alcohol restrictions ease post-Q3 2025, improving industry pricing competition.

2) **Price Tracking**: - **Baijiu**: Feitian (whole case/scattered) wholesale prices fell to ¥1,580/1,570 (down ¥95/70 MoM, ¥665/620 YoY). - **Packaging Materials**: Glass/PET/film prices dropped 16.6%/7.2%/8.3% YoY, while aluminum/paperboard rose 5.4%/16.6%. - **Raw Materials**: Sugar/flour/palm oil/pork/sunflower seed prices declined 12.9%/2.2%/12.9%/24.1%/6.2% YoY; quail eggs/soybeans rose 7.8%. - **Dairy**: Domestic raw milk prices dipped 3.2% YoY; GDT whole milk powder auction prices fell 5.7% YoY.

3) **Sector Performance**: The food and beverage index gained 0.8% in November, outperforming the Wind All-A Index by 3.1%. Pre-processed foods (+9.1%), dairy (+6.6%), and baked goods (+4.2%) led gains.

**Key Stock Picks**: - **Mass Consumption**: Dongpeng Beverage, Nongfu Spring, Wan辰 Group, Guoquan, Weilong, Yanjin铺子, Jinzi Foods, New Hope Dairy, Anjoy Foods, Baoli Foods, Ligo Foods, Haitian Flavors, Tsingtao Brewery. - **Baijiu**: Kweichow Moutai, Shanxi Fenjiu.

**Risks**: Slower-than-expected demand recovery, intensifying competition, channel reform delays, food safety issues.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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