Huatai Securities: Ajuste profundo en el sector de licores finos, el inicio prometedor de los bienes de consumo masivo se cumple

Huatai Securities Research report states that the liquor sector has undergone a deep 25-year pressure release and is now building momentum to bottom out, with revenue/profit growth rate declines in Q1 2026 significantly narrowing compared to previous periods. The frozen food sector shows signs of bottoming out and rebounding, with strong demand during the peak seasons of 2025/26, industry competition clearly easing year-on-year, and the net profit margin excluding non-recurring gains and losses improving YoY in Q1 2026; dairy products performed well during the Spring Festival, with expectations of continued supply-side clearing and demand recovery stabilizing milk prices; some beverage categories were impacted by takeout price wars in 2025, but profits remained stable after offsetting cost benefits and competitive pressures; beer, affected by policies and weather in 2025, faced volume and price pressures but is expected to recover during the peak season from a low base; condiment fundamentals stabilized in 2025, with leading brands expected to gain market share and reform results to be realized; leisure food, pressured by leading companies’ proactive adjustments and the timing mismatch of the Spring Festival in 2025, is expected to see a strong start in Q1 2026 during the peak season.

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Huatai | Consumer Staples: Deep Adjustment in Liquor, Mass Market Brands Show Promising Start

Key Points

Performance divergence continues in 2025 and Q1 2026: after a deep pressure release in 2025, the liquor sector is bottoming out with momentum, and revenue/profit growth rate declines in Q1 2026 have significantly narrowed compared to the full year of 2025. The frozen food sector shows a bottoming and rebound pattern, with strong demand during peak seasons of 2025/26, industry competition clearly easing YoY, and the net profit margin excluding non-recurring gains and losses improving in Q1 2026; dairy products performed well during the Spring Festival, with supply-side clearing and weak demand recovery supporting stable milk prices; some beverage categories were impacted by takeout price wars in 2025, but profits remained stable after offsetting cost benefits and competitive pressures; beer, affected by policies and weather in 2025, faced volume and price pressures but is expected to recover during the peak season from a low base; condiment fundamentals stabilized in 2025, with leading brands expected to increase market share and reform results to be realized; leisure food, pressured by proactive adjustments of leading companies and timing mismatches during Spring Festival in 2025, is expected to see a strong start in Q1 2026 during the peak season.

Liquor: Deep pressure release, sector bottoming and building momentum

CS liquor sector revenue/Net profit/Net profit excluding non-recurring gains and losses in 2025 declined by 18.1%/24.1%/24.3%, respectively; in Q4 2025, declines were 29.6%/45.9%/46.8%; in Q1 2026, declines narrowed to 0.7%/1.7%/1.9%. Although the industry continues to adjust, the declines in revenue and profits are much smaller than in 2025. During the Spring Festival 2026, liquor companies focus more on refined channel operations, effectively alleviating inventory backlog and price pressure. The industry is currently in a stage of inventory clearing and bottoming, awaiting gentle demand recovery.

Frozen Food: Peak season competition eases, leading companies’ fundamentals strongly recover

CS frozen food sector revenue/Net profit/Net profit excluding non-recurring gains and losses in 2025 increased by 1.8%/-9.5%/-11.5%; in Q4 2025, increases were 7.4%/-12.0%/-4.7%; in Q1 2026, increases are 21.9%/41.0%/44.5%. Demand during the Spring Festival saw a phased recovery, with industry competition during peak seasons of 2025/26 clearly easing YoY, and weaker promotional discounts driving strong fundamental recovery for leading companies.

Dairy: Good performance during Spring Festival, Q1 profitability improves YoY

CS dairy sector revenue/Net profit/Net profit excluding non-recurring gains and losses in 2025 declined by 0.1%/+26.4%/+77.0%; in Q4 2025, declines were 2.4% with narrowed losses; in Q1 2026, increases are 4.7%/10.5%/11.8%. Revenue during the Spring Festival was strong, mainly due to improved product pricing; on the profit side, continued benefits from raw milk costs and industry competition pressures, with leading dairy companies strictly controlling expenses, resulted in improved profitability in Q1 2026 YoY.

Beverages: Resilience in revenue in 2025, stable profits after offsetting cost benefits and competitive pressures

CS soft drinks sector revenue/Net profit/Net profit excluding non-recurring gains and losses in 2025 increased by 11.1%/6.5%/9.4%; in Q4 2025, increases were 2.8%/-25.1%/-17.7%; in Q1 2026, increases are 22.3%/29.9%/31.6%. Soft drink revenue demonstrated resilience in 2025, with profits remaining stable after offsetting cost benefits and competitive pressures. The timing mismatch during Spring Festival impacted some companies’ Q4 2025 and Q1 2026 performance. Expectations are high for the 2026 peak season, with attention to new product performance, cost pressures, and industry competition.

Beer: Weak demand in 2025, optimistic about low-base recovery in peak season 2026

CS beer sector revenue/Net profit/Net profit excluding non-recurring gains and losses in 2025 increased by 2.0%/16.7%/9.4%; in Q4 2025, increases were 2.1% with losses reduced; in Q1 2026, increases are 1.0%/6.1%/8.2%. In 2025, beer industry faced weak demand in catering channels, with volume and price pressures on leading brands, but benefited from cost redemptions boosting margins. In Q1 2026, stable revenue growth, cost benefits, and efficiency improvements drove YoY profit margin increases. Expect demand recovery driven by low base in the peak season.

Condiments: Fundamentals stabilized in 2025, focus on market share gains and reform achievements in 2026

CS condiments sector revenue/Net profit/Net profit excluding non-recurring gains and losses in 2025 increased by 2.7%/3.7%/7.4%; in Q4 2025, increases were 2.4%/-0.3%/12.8%; in Q1 2026, increases are 12.9%/18.3%/17.1%. In 2025, demand on the B-side (business side) was weak due to the sluggish restaurant sector, but leading brands performed better, benefiting from cost advantages and rising profit margins. In Q1 2026, improved restaurant demand during Spring Festival, combined with the continued effects of prior adjustments by leading companies, significantly improved sector operations.

Leisure Food: Channel adjustments in 2025 caused pressure, optimistic about category/channel leaders in 2026

CS leisure food sector revenue/Net profit excluding non-recurring gains and losses in 2025 declined by 4.8%/48.3%; in Q4 2025, declines were 10.4%/78.7%; in Q1 2026, increases are 9.1%/31.2%. In 2025, due to timing mismatches during Spring Festival and proactive adjustments by leading companies, revenue was under pressure. Changes in channel structure, rising costs of sunflower seeds, and weakened scale effects led to profit margin declines.

Risk warning: macroeconomic growth falling short of expectations, intensified industry competition, food safety issues.

(文章来源：第一财经)