CITIC Securities: Focus on Policy and Price Increase Chain Beneficiaries; Optimistic on Ranches and Leading Enterprises with Strong Pricing Power

CITIC Construction Investment Research Report points out that the Two Sessions have sent strong signals to boost consumption, with expanding domestic demand listed as the top priority for economic work in 2026. The report emphasizes increasing supply of quality consumer goods and services, with the government work report highlighting “stimulating consumption in sinking markets.” Policies such as replacing old consumer goods are being continued and expanded, focusing on bottom-up allocation opportunities for core consumer assets. The retail chain transformation aligns with the domestic demand policy direction. On March 13, 2026, Moutai implemented multiple core personalized non-standard product consignment policies, a key measure for its multi-dimensional operational model. Product ownership remains with Moutai, distributors pay a deposit to participate, transactions are conducted via the iMoutai platform, and profits are earned through a fixed 5% service fee. Moutai has established assessment mechanisms to drive sales, with online and offline coordination, solidifying its transition to consumer direct (To C) and reshaping the baijiu channel ecosystem. Under input-driven inflation pressures, attention is on targets benefiting from price increases, with confidence in upstream ranches. The resonance of meat and dairy prices in the second half is expected, with beef prices continuing to rise. Some bulk retail stores reported nearly double-digit same-store growth in January-February, exceeding expectations. Currently, bulk snacks are in a period of improved competitive landscape and profit release, with potential for single-store growth in 2026, presenting an investment opportunity in retail chain transformation.

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CITIC Construction Investment | Focus on Policy and Targets Benefiting from Price Increases, Optimistic about Ranches and Leading Price-Setting Power Giants

The Two Sessions have sent strong signals to boost consumption, with expanding domestic demand listed as the top priority for the 2026 economy. The government emphasizes increasing supply of quality consumer goods and services, with policies like “stimulating sinking market consumption” and continued expansion of old-for-new policies. Focus is on bottom-up allocation opportunities for core consumer assets. On March 13, 2026, Moutai launched multiple core personalized non-standard product consignment policies, a crucial step for its multi-dimensional operational model. These include aged Moutai (15 years), boutique Moutai, zodiac liquor for the Bingwu Year, and the full series of small-volume products like Feitian Feitian and 53-degree Feitian Moutai, all core personalized products, marking a substantial move in Moutai’s market-oriented reform from top-level design to execution.

The consignment model has clear core rules and operational logic: product ownership remains with Moutai, distributors act as channel service partners by paying deposits, all transactions are completed via the iMoutai platform, and original group-buy customers can scan exclusive QR codes at stores to purchase, with prices strictly following iMoutai standards. Distributor profit models have shifted from traditional margins between factory and retail prices to earning a fixed 5% service fee based on total product price, with specific per-bottle service fees (e.g., 210 yuan per bottle for 15-year aged Moutai, 115 yuan for boutique Moutai). These standards are based on comprehensive calculations considering channel costs and service capabilities.

To ensure efficient operation, Moutai has established replenishment and performance assessment mechanisms, with deep online-offline channel integration. Deposits paid by distributors are valid long-term; replenishment is not required unless inventory drops below 70% of initial stock, and if replenishment is not made for two consecutive months, the consignment cooperation is automatically terminated. This incentivizes distributors to improve customer acquisition and sales. The iMoutai platform handles “efficiency management and outreach,” while offline distributors focus on “conversion and service.” The use of exclusive QR codes creates a closed loop linking online transactions with offline pickup and experience, aligning with Moutai’s “five-channel” layout: wholesale, offline retail, online retail, catering, and private domain.

The implementation of Moutai’s consignment model not only significantly reconstructs its channel ecosystem but also offers a new direction for the baijiu industry. It allows the brand to maintain control over the supply chain, breaking the traditional channel arbitrage profit logic, and promotes profit return to service, further solidifying its To C transformation. This brings the brand value closer to actual consumer perception. Industry-wide, Moutai’s innovation in channel models, profit distribution, and price control reshapes the industry’s channel operation logic. Its “shared responsibility and benefits” cooperation concept will also promote a healthier, more market-oriented baijiu industry.

Currently, baijiu sector valuations have fallen to near a decade-low, with the CSI Baijiu Index PE-TTM at about 17 times, the lowest in ten years. Coupled with stable sales during the Spring Festival, gradually improving channel inventories, and high dividend support, the sector shows ample safety margins and long-term investment value, with significant valuation recovery potential.

Beer: China Resources Beer accounts for goodwill impairment of Jinsha, with post-impairment performance slightly exceeding expectations

CR Beer expects a profit of approximately RMB 2.92-3.35 billion in 2025, down 29.6%-38.6% year-on-year, mainly due to goodwill impairment of Jinsha Brewery of about RMB 2.79-2.97 billion. Restoring with a median impairment of RMB 2.88 billion, the adjusted profit for 2025 is RMB 5.8-6.23 billion, up 21.9%-30.9%, slightly above expectations. The beer industry benefits from a low base in catering in 2026, along with CPI stabilization and the World Cup boost, which may revive beer consumption in dining.

Dairy: Spring Festival dairy demand remains stable; watch for industry cycle turning points

On March 11, New Hope Dairy announced plans to issue H-shares and list, aiming to deepen internationalization and enhance domestic competitiveness. In the first week of March, raw milk prices were 3.03 yuan/kg, down 1.6% YoY (narrowing decline), with dairy cow culling increasing month-over-month in February. In 2026, upstream supply is expected to continue adjusting, with weak profitability in socialized ranches and natural culling of older cows as core drivers. Leading dairy groups prefer M&A over expanding farms. Raw milk supply-demand remains balanced, with the cycle turning point approaching. Sanhe股份’s reforms in 2025, including organizational adjustments, personnel optimization, low-efficiency product elimination, and divestment of low-performing subsidiaries, are showing results. In 2026, domestic deep-processing capacity may see intensive investment, suppressing raw milk demand, promoting domestic substitution of raw materials for B2B, and opening large market space.

Condiments & Frozen Foods: Spring Festival catering performance exceeded expectations; price competition may ease; new season yeast and molasses expected to release cost elasticity

Tianwei Food’s annual report shows 2025 revenue of RMB 3.449 billion, down 0.79%, net profit attributable to parent RMB 570 million, down 8.79%, affected by intensified industry competition, proactive adjustments, and inventory digestion. The new molasses season is ending, with procurement prices expected to drop significantly. According to Fantang Technology data, February molasses averaged 752.61 yuan/ton, down 27.33% YoY, with March transaction prices reaching 767 yuan/ton. Core raw material prices for yeast have declined sharply, and Angel Yeast is expected to continue profit expansion in 2026. The company is also accelerating capacity building for yeast protein and extracts, creating a second growth curve domestically. Looking ahead to 2026, easing price wars will improve competition, shifting focus from price to quality-price ratio. Fragmented channels, rising new retail, and increased catering chainization will favor high-quality channel development, supply chain efficiency, and flexible customization.

Soft Drinks & Snacks: Rising PET prices driven by oil prices raise profit concerns; short-term performance unaffected

During the Spring Festival, sales were strong, with bulk snacks thriving, becoming popular among young people returning home and an important channel for family shopping. Some leading bulk snack stores achieved double-digit growth, with new seasonal products and gift boxes, though still mainly loose and bagged. Gift box sales improved compared to last year. Bulk snacks dominate the lower-tier market, with steady growth expected in 2026 through product iteration and store upgrades.

Foreign media “Financial Times” reports that Chinese authorities are studying a consumption tax on high-sugar drinks, with no specific rate or implementation date yet. If implemented, it will prompt beverage companies to reformulate with sugar substitutes, benefiting alternative sweetener companies, and influence consumer preferences toward sugar-free drinks.

Demand recovery has been below expectations. Over the past two years, macro factors have slowed economic growth, impacting national income growth. Short- to medium-term income growth and consumption power may not recover as expected. Food safety remains a key consumer concern; despite industry efforts to improve quality control, the long supply chain involves many entities, posing ongoing safety risks. Cost fluctuations are also notable; upstream commodity prices have become more volatile. High-margin premium baijiu is less affected by raw material price swings, but lower-end spirits and condiments, with higher cost proportions, may see profit pressures from raw material cost volatility.

(Source: Jiemian News)