DFZQ released a research report stating that the food and beverage sector is currently undervalued, with performance being the core issue. A demand inflection point is expected in 2026, where traditional consumption (such as baijiu and catering supply chains) may see a bottom reversal and earnings rebound after sufficient downward revisions, while new consumption will continue its high growth trajectory due to structural dividends. The sector is likely to witness both overall recovery and structural prosperity coexisting.
DFZQ's key views are as follows:
**Food & Beverage in 2026: A Bullish Starting Point with Performance as the Core Driver** The report suggests that from 2021 to 2024, the sector focused on digesting valuation bubbles through earnings releases. By the end of 2025, valuations have returned to historical lows, but weak consumer demand has led to downward earnings revisions, making performance the central concern.
**Performance Outlook: Transition from Structural Dividends to Overall Recovery, Balancing "Old" and "New" Consumption** With economic restructuring and household balance sheet recovery, 2026 could mark a demand-side inflection point. For some time, consumption may exhibit both "L-shaped demand" and "structural" characteristics—new consumption will maintain strong performance, while traditional consumption undergoes earnings adjustments. Over time, the sector may see both aggregate demand recovery and structural prosperity, with both traditional and new consumption likely to experience upward earnings revisions. Traditional consumption, in particular, could demonstrate earnings elasticity.
**Holding "Old" Consumption: Demand Bottoming and Operational Improvements to Drive Reversal** For traditional consumption, baijiu is seen as the best indicator in 2026. DFZQ expects baijiu earnings to undergo significant downward revisions in the first half of 2026 before entering a phase of sequential improvement, signaling a bottoming-out for the sector. Meanwhile, catering supply chains—including frozen foods, condiments, and dairy—show healthy inventory levels and low earnings bases, with some companies leveraging competitive advantages to achieve earnings reversals or profit rebounds. For baijiu, once earnings stabilize at an "L-shaped bottom," leading firms may strengthen their "bond-like asset" attributes, offering attractive valuations and potential stock price upside driven by re-rating.
**Embracing "New" Consumption: Structural Dividends to Sustain Growth Momentum** As a mature industrial economy undergoing structural transformation, China's consumption landscape will retain its "large aggregate demand, strong structural growth" characteristics for an extended period, supported by demographic trends and external conditions. Innovation in categories, channels, and markets will continue to drive earnings growth in new consumption segments.
**Risk Factors:** 1) Food safety issues; 2) Changes in industrial policies; 3) Management team transitions.
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