Caitong Securities: Performance differentiation continues in the food and beverage industry, but marginal stabilization is optimistic about the three main lines

The Zhitong Finance App learned that Caitong Securities released a research report saying that the fundamentals of the food and beverage industry have entered the bottoming stage, and the quarterly report showed a trend of differentiation under a high base. Due to differences in the pace of business, it brought about different performance, but overall inventory was low, and the trend basically showed a marginal stabilization trend. The bank is optimistic about three main lines, one smooth cycle, two channel changes, and three fundamentals. 1) Cyclical cycle: Fundamentals are bottoming out and are expected to gradually recover. Liquor and restaurant chains are recommended, and beer opportunities are emphasized. 2) Channel logic: It is still the bank's most promising direction. It is not affected by macroeconomic expectations, and has a strong α. 3) Fundamental logic: 1Q2025 forward-looking ranking, drinks = polymorphism > snacks > beer > basic condiments > dairy products > liquor > quick freezing.

The main views of Caitong Securities are as follows:

Food and beverage: The first quarter was still divided, but the overall margins stabilized

Judging from the research situation of sugar and wine parties, the overall demand for channel feedback has not deteriorated further, and some scenes, such as banquets, have shown an improvement trend, and they are also more positive and optimistic about the restoration of subsequent catering. The bank believes that the fundamentals of the industry have entered the bottoming stage, and the quarterly report showed a trend of differentiation under a high base. Due to the different business pace, it brought about different performance, but overall, inventory was low, and the trend was basically stabilizing marginally.

Liquor sector: demand is recovering steadily and weakly, and prudent management is the main focus

Demand recovered steadily and weakly in the first quarter, and there were highlights in the lackluster post-holiday period. The overall performance of sales during the Spring Festival showed a moderate recovery trend. The off-season after the holiday season declined as scheduled, but there are certain highlights: 1) the business scene is gradually improving, with loose policies or being implemented, with signs of bottoming out and stabilizing; 2) public banquets generally picked up, and feedback from sinking channels was more positive; 3) inventory generally returned to benign, prices were stable, and enthusiasm for channel replenishment increased after the holiday season. Price comes first in terms of quantity, and wine companies operate more calmly. During the 2024 adjustment period, wine companies are more in the exploration, trial and error stage; entering 2025, definitive strategic adjustment/transformation plans have been released one after another, and the pace leader is Wuliangye's systematic marketing reform.

In summary: 1) The 2025 target is pragmatic and rational, and the layout is generally based on single-digit growth; 2) the long-term principle of price first and quantity control is no longer a quantitative burden; 3) marketing actions are more precise and focused, individualized strategies prevail, and formulaic market management is a thing of the past. Overall, the liquor sector may generally slow down in 1Q2025, but there may be a marginal improvement compared to the second half of 2024. Adjustments on the supply side of liquor are gradually being put in place. The removal of liquor has come to an end. The demand side is mainly stable, and it may be marginal or difficult to move downward.

Popular products sector: Low inventories are expected to pick up, and beer, beverages and polymodulation are relatively dominant

1) Beer: The industry entered the inventory removal stage last year. The overall package was lightweight, and there is still a single product logic and management improvement logic. The catalyst for peak season is obvious. 2) Snacks: The base figure fluctuates greatly due to the misalignment of the Spring Festival. The mass sales channel of snacks is still a core growth contributor, focusing on category logic, such as konjac, oats, etc. 3) Catering chain: The first quarter was generally lackluster, but subsequent restaurant recovery and channel changes are expected to bring in additional volume. The B-side of the reversal in the first quarter performed brilliantly. 4) Dairy drinks: Dongpeng drinks may continue to increase, and there may be pressure related to gifts. Focus on the logic of new products, such as health water, tea drinks, and whiskey.

Risk warning: Consumption recovery falls short of expectations, food safety risks, fierce industry competition, etc.