CITIC Construction Investment: Optimistic that the Baijiu sector may迎 a decade-long bottom-around the Spring Festival investment opportunity

China Securities Journal Research Report states that on January 29, the liquor sector experienced an epic surge, with about 20 stocks hitting the daily limit and the index rising by 9.79%. Moutai increased by 8.61%, primarily driven by better-than-expected sales volume and wholesale prices, recognition of reform, as well as easing real estate policies and expectations of PPI turning positive. On January 30, Moutai’s wholesale prices continued to rise, with Feitian, vintage, and zodiac wines all increasing in price, and channel sales remaining strong. It is expected that the industry will bottom out by 2026, with leading companies increasing their market share. The white liquor sector may present a ten-year bottoming investment opportunity around the Spring Festival. Currently, the valuation of the white liquor sector is at a historic low, offering strong bottom-positioned allocation value, with additional focus on consumption policy catalysts. The bottom allocation logic includes performance clearing to unload burdens, strong brand support to drive sales, operational empowerment of channels, and exploration of new marketing models.

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CITIC Construction Investment: Reiterating the Ten-Year Bottom Investment Opportunity in White Liquor

On January 29, the white liquor sector experienced an epic surge, with 20 stocks hitting the daily limit and the index rising by 9.79%. Moutai rose by 8.61% to 1,437.72 yuan, with a trading volume of 26.3 billion yuan. The sector’s index increased by 9.79%, with net main fund inflows exceeding 6 billion yuan. The core reasons for this surge include: better-than-expected sales volume and wholesale prices for Moutai, market recognition of its price reform, and expectations of PPI turning positive driven by easing real estate policies and rising industrial raw material prices.

On January 30, Moutai’s wholesale prices continued to climb, with Feitian original box and loose bottles reaching 1,710 yuan and 1,570 yuan respectively, and retail prices rebounding. Distributors’ quotas and iMoutai’s flat-price wines sold out, while vintage and Year of the Horse zodiac wines showed significant scarcity premiums.

Moutai’s receivables and shipments in January progressed faster than last year, with positive sales growth after New Year’s, and the effects of price reform becoming evident. The industry is also recovering pricing power and restructuring channel mechanisms. Coupled with the bottoming of the real estate sector and the transmission of PPI expectations to consumption, it is forecasted that the white liquor industry will bottom out by 2026, with inventory pressures easing and leading companies continuing to increase their market share amid stock competition.

The sector is attractive for investment around the Spring Festival, with current valuations at historic lows, offering strong bottom-positioned allocation value, and with attention to consumption policy catalysts. The bottom allocation logic includes performance clearing to unload burdens, strong brand support to drive sales, operational empowerment of channels, and exploration of new marketing models.

2. Mass Market Products: Strongly promoting retail chain reform investment opportunities. 1) Focus on new retail store formats, customized channels, and the recovery of catering chains. Since Q4 2025, price wars in the catering supply chain have slowed, and some companies’ supermarket customized products are entering a volume-up phase. 2) The health and functional big product track. The Spring Festival peak season in 2026 is expected, with attention to snack sector elasticity during the festival. 3) Price cycle turning point. The resonance of meat and dairy is driving the raw milk cycle upward, benefiting leading liquid milk companies with improved competitive landscape, as rising milk prices restore farm profitability, and stable milk prices increase farm profit elasticity. The new season of yeast and molasses since December has seen continuous cost reductions, releasing profit potential.

Promoting retail chain reform investment opportunities: expanding product categories and scenarios, deepening penetration into broad markets, and exceeding profit margin expectations.

Looking ahead to Q1, two main themes are recommended:

1. Year-end market and spring rally: growth leads, white liquor prepares for spring.
   Based on monthly data and market performance, the year-end rally features “growth leading, white liquor accumulating strength.” Currently, market funds favor sectors like snacks and dairy with clear prosperity and higher elasticity, supported by policy and industry trends, with continuous monthly data improvement, becoming the core driver of the year-end rally. Meanwhile, the white liquor sector is in a “bottoming and accumulating” phase. As the Spring Festival approaches, terminal stocking demand gradually initiates. Recent stabilization of top brands’ wholesale prices and inventory reduction have begun to show marginal changes. Post-Festival, with the recovery of consumption scenarios and demand release, white liquor is expected to see valuation recovery.

2. Catalysts in late January: multiple positive factors may lead to better-than-expected quarterly results.
   Since late January, multiple events may catalyze better-than-expected first-quarter earnings. Companies are entering the peak sales season during the Spring Festival, and some mass-market companies’ staggered stocking for the festival may boost January and Q1 data. Additionally, the valuation of food and beverage sectors is at historic lows, and with capital inflows and sentiment recovery, event-driven earnings surprises could further amplify sector gains.

【White Liquor】: Terminal sales recovery drives Moutai wholesale price increase, epic sector surge

On January 29, the white liquor sector surged explosively: 20 stocks hit the daily limit (only Moutai and a few others did not), Guizhou Moutai rose 8.61% to 1,437.72 yuan, with a trading volume of 26.3 billion yuan; Zhenjiu Lidu (Hong Kong stock) rose 12.35%. The sector index increased by 9.79% in a single day, with net main fund inflows exceeding 6 billion yuan, and margin financing net buying of Moutai exceeding 2.8 billion yuan. The core drivers include: 1) better-than-expected sales volume and wholesale prices for Moutai, with positive growth since New Year’s and wholesale prices rising to around 1,600 yuan; 2) high market recognition of Moutai’s market-oriented price reform; 3) real estate policies removing the “three red lines” and rising industrial raw material prices (non-ferrous metals, chemicals, oil & gas) boosting PPI expectations.

On January 30, Feitian original box wholesale price reached 1,710 yuan, up 55 yuan since the 26th, loose bottles at 1,570 yuan; retail prices in many regions rebounded to 1,700-1,800 yuan, some chain stores quoted 1,750 yuan, and distributor quotas for January-February are nearly sold out. iMoutai flat-price wines at 1,499 yuan are continuously sold out. 50-year vintage boxes increased by 1,000 yuan daily to 25,500 yuan; Year of the Horse zodiac wines increased by 250 yuan daily to 2,950 yuan, with significant scarcity premiums.

From the reform perspective, leading liquor companies are taking the lead, with the entire industry following, aiming to regain pricing power, break the traditional channel and pricing system constraints, and build a more dynamic, market-aligned channel incentive mechanism that deeply bonds channel value, brand value, and industry value. The real estate bottoming expectations: developers are no longer required to report the “three red lines” monthly, with policies shifting from tightening to loosening. PPI improvement expectations: rising prices of industrial raw materials like non-ferrous metals, chemicals, and oil & gas are expected to boost PPI, which is highly correlated with high-end white liquor prices, and the positive PPI transmission to consumption is promising. Industry cycle: by 2026, the industry is expected to bottom out, with reduced channel inventory pressures and the most difficult period of alcohol bans behind. Under stock competition, leading companies will continue to increase their market share.

It is recommended to cherish current low-positioned investment opportunities. High-end and stable leading liquor companies: leveraging strong brands and rigid demand, they will benefit first from recovery in business and gift consumption, with high certainty of performance and stable returns. These companies can benefit from valuation recovery and provide stable dividends of ≥3%, with relatively high overall returns. Mid-to-high-end and regional flexible liquor companies: regional leaders with deep market roots and refined operations are expected to increase market share amid the recovery of banquets and mass demand. Growth-oriented companies: those optimizing distribution, innovating products, and expanding markets, may achieve excess returns if phased distribution adjustments and sales exceed expectations.

【Beer】: Several specialty beer new products launched, industry inventory at low levels

Recently, Löwenbräu launched its 2026 new concept spring lineup, with Fenghua Snow Moon new seasonal Chinese craft beer. China Resources Beer and Pang Donglai jointly launched the first exclusive customized product—Donglai Belgian-style white beer. On January 18, China Resources Beer Guiyang branch officially launched the upgraded Huangguoshu Waterfall Beer. According to National Bureau of Statistics data, in December 2025, the output of large-scale enterprises’ beer was 2.227 million kiloliters, down 8.7% year-on-year. Industry inventory continues to decline, with total beer output in 2025 at 35.36 million kiloliters, down 1.1%. Considering the seasonal slowdown, companies are in inventory reduction mode, and attention should be paid to subsequent New Year planning. The beer sector, affected by previous alcohol bans, rising aluminum prices, and Q4 industry off-season, has seen stock prices retreat to low levels. With a low base in 2026 catering, gradually stabilizing CPI, and the 2026 World Cup driving demand, a recovery in beer is anticipated.

【Dairy】: Being sought after for mergers and acquisitions, potential for dairy industry cycle turning points

In the fourth week of January, the average milk price in main production areas was 3.04 yuan/kg, up 0.3% from the previous week but down 2.6% year-on-year. The milk price cycle continues to bottom out. Major dairy groups are seeking M&A opportunities at the cycle turning point, supported by major shareholders, aiming to consolidate industry resources and increase market share, demonstrating confidence in future industry development. By 2026, domestic deep-processing capacity may be densely invested, suppressing raw milk demand, promoting domestic substitution of raw materials at the B-end, and creating huge market space.

【Condiments & Frozen Food】: Catering chain enters peak season, price competition may ease, new season of yeast and molasses expected to release cost elasticity

A national standard for prepared dishes is expected to be issued, providing clear definitions and classifications. On January 22, the State Council Food Safety Office, together with the National Health Commission and Market Supervision Administration, drafted the “National Food Safety Standard for Prepared Dishes” and related terminology. They also drafted an announcement on promoting transparent processing methods in catering, which will be open for public comment soon. The new season of yeast and molasses has begun, with procurement ongoing in southern regions. According to Pan Sugar Technology data, in December, molasses prices averaged 787.23 yuan/ton (down 33.79% YoY), with recent transaction prices at 716 yuan/ton, indicating significant raw material cost reductions and potential profit elasticity in 2026. The company is also accelerating capacity expansion for yeast protein and extracts, opening a second growth curve domestically. As the Spring Festival approaches, new product launches in catering supply chains may accelerate, with products like Tiga’s taro and salted egg yolk meat floss buns and December’s popular egg tarts performing well. Sam’s Club has launched new products like claypot braised noodles, and KFC is preheating the return of Golden Sand Chicken Wings (seasoning supplied by Ruidian). Annually, new products like Anjoy’s vacuum-packed 6.0 and Sam’s Club’s new black tiger shrimp are gaining sales momentum. Looking ahead to 2026, price competition is expected to ease, shifting focus from price wars to value-for-money competition. Channel fragmentation, the rise of new retail, and increased chain restaurant penetration will prompt companies to embrace high-quality channels, improve supply chain efficiency, and develop flexible customization. Key recommendations include: 1) leading companies in niche sectors with diverse product lines, comprehensive channel layouts, and strong export prospects; 2) sectors where price wars are easing, embracing new retail and catering customization with product innovation; 3) expectations of industry turnaround that could unleash internal reform potential.

【Soft Drinks & Snack Foods】

As the Spring Festival approaches, attention should be paid to the stockpiling of leisure snacks.

The trend of functionalization and health orientation in beverages continues.

Demand recovery has fallen short of expectations. Over the past two years, macroeconomic factors have slowed economic growth, impacting national income growth. In the short to medium term, the pace of residents’ income growth and consumption power recovery may be less than expected. Food safety risks remain a concern; although companies have improved quality control, the long supply chain involves many links and enterprises, posing ongoing safety risks. Cost volatility risks are also notable: recent fluctuations in upstream commodities have increased. High-margin categories like high-end white liquor are less affected by raw material price swings, but lower-end spirits and condiments with higher cost proportions may see profit impacts from raw material price fluctuations.

(Source: People’s Financial News)