Zhongjin: Demand for Baijiu may steadily recover next year, and mainstream food products are expected to gradually warm up.

CICC released a research report stating that this year, the demand in the food and beverage industry has been relatively weak due to factors such as insufficient consumer confidence, cautious expectations regarding income growth, and overall performance showing a K-shaped differentiation in consumption trends. High-end products are under pressure, while products with a high quality-price ratio and those that provide emotional value to consumers have shown more outstanding performance. Looking ahead to 2025, CICC predicts that with the implementation of a package of stimulus policies, essential consumption is expected to benefit directly and indirectly from measures such as the distribution of consumption vouchers, boosting consumer confidence, and improving residents' income expectations. Business and gifting scenarios are expected to gradually benefit from the increase in economic activity, and the demand for liquor may stabilize and recover, continuing the trend of industry concentration and differentiation. Mass-market food products may benefit from the recovery of consumer confidence among residents. CICC maintains a relatively optimistic attitude towards the revival of demand for popular food products next year from a low base this year, and believes that trends such as quality-price ratio and emotional value in consumption are likely to continue. The main viewpoints of CICC are as follows: Liquor: Looking ahead to 2025, the growth in liquor supply is expected to slow down, with demand gradually recovering, achieving a supply-demand rebalancing. The industry has experienced weak demand since 2024, with companies facing pressure due to insufficient brands and capabilities, as well as accumulated inventory burdens in recent years. Intense competition is evident in the stock competition, and mainstream companies are increasingly focusing on sustainable and stable development. CICC predicts that the industry supply in 2025 is expected to slow down to adapt to the new phase of supply-demand balance. On the demand side, CICC forecasts that industry demand will steadily recover, benefiting from the gradual implementation of national stimulus policies, with business and gifting scenarios gradually benefiting from the increase in economic activity. The industry is expected to show a weak recovery trend of low before high, with the first half of the year focusing on bottoming out, and demand potentially recovering in the second half of the year, leading to a gradual weak recovery process for the industry. Mass-market food products: Under the downturn in industry demand, leading companies have completed deep adjustments and efficiency improvements, and are expected to gradually warm up in 2025. Looking ahead to 2025, CICC believes that most sub-industries in the mass-market food products sector have the potential to recover in demand under potential policy stimulus, and expects the consumption style of quality-price ratio and emotional value to continue. The overall scale of industries such as soft drinks and snacks is expected to expand; leading companies on the supply side have completed channel adjustments, internal efficiency improvements, and steady improvements in operational quality, optimizing channel inventory.