According to Zhitong Caijing APP, China Galaxy Securities Co., Ltd. (ASX: 601881) has released a research report stating that looking ahead to 26Q4, it maintains its previous view and is optimistic about the following sectors: 1) Dairy products, where stabilizing and rebounding raw milk prices drive slower downstream competition and improved profitability, while demand-side upgrading in deep processing and low-temperature categories opens up growth space; 2) Restaurant supply chains, where share prices have already corrected significantly, and combined with 26Q4 policy expansion, macro demand may improve; 3) The baijiu sector, where share price adjustments have been relatively thorough, leading brands' wholesale prices are bottoming out and recovering, with focus on sell-through and destocking; 4) The beverage sector, where cost pressure has already been reflected in share prices, with attention on the pace of demand recovery; 5) Individual stocks driven by new channels and new categories, which still have long-term growth space. The main views of China Galaxy Securities Co., Ltd. (ASX: 601881) are as follows:
Baijiu: The industry overall is still in a destocking phase, focus on structural growth investment opportunities
The baijiu industry remains in a phase of scale contraction. Against the backdrop of pressured sell-through, liquor companies are actively destocking, and the adjustment trend is expected to continue in Q4. Under a weak beta backdrop, continue to seek alpha opportunities, with three directions worth watching: 1) The ultra-high-end price band, where Moutai still has relatively good sell-through performance due to its strong brand power; 2) The price band below 300 yuan and light-bottle liquor, centered on banquet, light business, and self-drinking consumption scenarios, which are less affected by macroeconomic cycles and still have relatively good growth potential; 3) Companies still in the stage of broad regional brand expansion, which can partially offset the impact of the industry downcycle, such as Yingjia Gongjiu and others.
Beer: The 8-12 yuan price band still has room, optimistic about quality upgrading driving craft beer growth
The report believes that the beer industry's overall scale is under pressure due to weaker restaurant demand, but it still has structural growth dividends, and it remains optimistic about two major directions going forward: 1) The 8-12 yuan price band still has relatively large growth space, because this price band can support strong product power and channel profits, and competition is not yet intense. Attention should be paid to Yanjing Beer and Huiquan Beer, which are actively positioning in this price band; 2) Craft beer is one of the few beer categories that has achieved high-speed growth in recent years, and its penetration rate is still low compared with mature overseas markets, leaving clear room for future improvement.
Beverages: Structural factors plus short-term shocks, focus on leading companies during the industry adjustment phase
The beverage industry's demand growth is expected to slow in 2026. The report judges that the core reasons are weakening channel dividends as a structural factor, combined with the short-term shock of slower travel growth. In addition, the cost side is under pressure from rising crude oil prices. From the perspective of 26Q3, the report believes this trend may continue until the end of the year before further observation. But a positive signal is that the report has found signs of supply clearing in some categories. For example, at this year's Autumn Sugar Fair, the number of exhibiting brands in formerly popular categories such as functional beverages, coconut water, and sugar-free tea decreased. In addition, juice, ready-to-drink milk tea, oat milk, and low-alcohol drinks currently enjoy relatively better prosperity, with more exhibiting brands and new products at this year's Autumn Sugar Fair.
Snacks: Supply in the konjac category may improve marginally, fresh snacks become an industry hotspot
Demand growth in the konjac category slowed this year, but there are now also improvement signals on the supply side. The number of related new products and exhibiting brands at the Autumn Sugar Fair decreased noticeably, and the report expects the supply-demand relationship to improve by 2027. Fresh snacks have become a current industry hotspot. On one hand, fresh snack store brands are exhibiting and recruiting franchisees independently; on the other hand, some manufacturers are upgrading products using freshness as a concept. In addition, OEM factories for fresh snack stores are launching NB brands to recruit distributors.
Risk warnings: The risk of demand recovery falling short of expectations, the risk of intensified industry competition, the risk that downstream channel transformation results fall short of expectations, and food safety risks.
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