Haitong International has released a research report forecasting mixed performance across eight essential consumer goods sectors in March. The report predicts growth in frozen food, condiments, food service, and soft drinks, while sub-premium and above baijiu, mass-market and below baijiu, dairy products, and beer are expected to see declines. Beer sales shifted from growth to negative territory compared to the previous period. Other declining sectors either remained flat or saw a narrowing of their declines. Among the growing sectors, only soft drinks did not experience a moderation in their growth rate. The analysis attributes this primarily to the dissipation of the Chinese New Year consumption boost, a weakening recovery in the food service supply chain, soft demand for beer, an uneven recovery for baijiu, a bottoming-out and stabilization of demand for dairy products, and stable growth for soft drinks entering their peak season. Key views from Haitong International are as follows:
Sub-Premium and Above Baijiu: Revenue for this segment in March was RMB 295 billion, a year-on-year decrease of 14.5%. Cumulative revenue for January to March was RMB 1,205 billion, down 14.3% year-on-year. Premium baijiu prices have stabilized, highlighting the resilience of essential demand, with genuine consumption from households and individuals continuing to be released. Sub-premium baijiu continues to face pressure on both volume and price, mainly due to a slower-than-expected recovery in business entertainment scenes, coupled with significant market share diversion to both ends of the spectrum amid consumption tiering and a slow pace of channel inventory reduction.
Mass-Market and Below Baijiu: Revenue for this segment in March was RMB 202 billion, a year-on-year decrease of 1.0%. Cumulative revenue for January to March was RMB 605 billion, down 1.5% year-on-year. Demand for mass-market baijiu remained relatively stable in March, supported by daily personal consumption, family gatherings, and banquet scenes in counties and townships. Channel sell-through was steady, price bands remained generally stable, and the sector demonstrated strong resilience underpinned by essential demand.
Beer: Beer sector revenue in March was RMB 140 billion, a year-on-year decrease of 1.4%. Cumulative revenue for January to March was RMB 462 billion, down 1.5% year-on-year. Overall terminal demand was weak in March, with slow sell-through in consumption venues like restaurants and supermarkets, leading to significantly increased discounting by terminal channels. As temperatures gradually rise, the industry is entering its peak season stocking cycle. Downstream stocking willingness is improving steadily, and channel inventory replenishment is accelerating, laying the groundwork for peak season demand release in the second quarter.
Condiments: Condiment sector revenue in March was RMB 355 billion, a year-on-year increase of 3.0%, though the growth rate slowed compared to February. Cumulative revenue for January to March was RMB 1,239 billion, up 4.0% year-on-year. Although the condiment sector maintained revenue growth in March, supported by the ongoing recovery of the food service channel, the year-on-year growth rate decelerated noticeably from February due to the end of the peak season, increased consumer-side discounts, and a slower inventory replenishment pace. The recovery trend in the food service channel continues, with daily procurement demand from small and medium-sized business clients remaining stable, while demand from large business and industrial clients held steady.
Dairy Products: Dairy product sector revenue in March was RMB 339 billion, a year-on-year decrease of 0.9%, with the sequential decline narrowing. Cumulative revenue for January to March was RMB 1,189 billion, down 1.9% year-on-year. Demand for liquid milk remained in an adjustment phase in March, with channel feedback indicating stable daily household consumption but insufficient seasonal consumption uplift. The March price report observed that the average online retail discount for liquid milk narrowed by 1.6 percentage points compared to February (from 66.1% to 64.5%), while the median discount rate remained unchanged at 65.1%, indicating a stabilizing competitive landscape and a gradual firming of the price system.
Frozen Food: Revenue for the frozen food sector in March was RMB 103 billion, a year-on-year increase of 6.3%. Cumulative revenue for January to March was RMB 393 billion, up 7.9% year-on-year. Food service demand, particularly dine-in demand, continued to improve, providing a clear boost to frozen food sales. Additionally, channel inventory was previously at low levels. The absence of a major holiday in March led to a slight demand pullback and a slight increase in price discounts, which is considered a normal phenomenon. Rising prices for some commodities in March increased production costs, suggesting potential for gradual product price increases in the future.
Soft Drinks: Soft drink sector revenue in March was RMB 480 billion, a year-on-year increase of 3.2%. Cumulative revenue for January to March was RMB 1,940 billion, up 1.9% year-on-year. The March price report noted that discounts for soft drinks continued to expand sequentially, with the discount rate at a relatively low level since 2024 and approximately 18 percentage points lower than the discount rate in the same period of 2025, reflecting intensified market competition. Tea beverages experienced greater discounting than packaged water. Leading companies reported that revenue and profit up to March were "in line with expectations," while carbonated drinks were affected by regional price reductions.
Food Service: Food service sector revenue in March was RMB 138 billion, a year-on-year increase of 3.8%. Cumulative revenue for January to March was RMB 440 billion, up 3.6% year-on-year. Since stabilizing and recovering in the fourth quarter of 2025, the food service industry has benefited from the restoration of consumption scenes and policy support. The competitive landscape is optimizing, with increased chain rates and store expansion into lower-tier cities creating new growth avenues for leading companies. Following a trend of year-on-year declines for several months starting in March 2025, the sector's growth rate is expected to benefit from a low base effect beginning this month.
Risk warnings include economic growth falling below expectations, slow income growth, and food safety issues.
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