Southwest2025 Food and Beverage Investment Strategy: Liquor fundamentals still under pressure, focus on selecting high-quality stocks from popular brands.

Southwest released a research report stating that in the current food and beverage industry, different sub-sectors are exhibiting different development trends and opportunities. Among them, the long-term value of the Baijiu (Chinese liquor) sector is highlighted; the beer industry is expected to see a good recovery in the next 25 years due to the low base effect and economic stimulus policies. While the demand for dairy products is temporarily weak, the decrease in raw milk prices provides profit elasticity for dairy companies. Seasonings benefit from the recovery of the catering industry and the trend towards healthier consumer choices, leading to a continuous improvement in the industry landscape. The leading frozen food companies, leveraging their scale advantage, demonstrate clear advantages in the industry's growth and consolidation process. Southwest's main points are as follows: Baijiu: The long-term value of Baijiu allocation is highlighted. Currently, high-end and mid-range Baijiu are under pressure due to economic factors. It is recommended to focus on high-end and some regional Baijiu. From a long-term perspective, the value of Baijiu allocation is emphasized. Beer: Despite the slowing trend of consumption upgrade, the continuous upgrading of product structure provides sufficient momentum for the industry's high-end development. The national leading breweries are expected to benefit from the low base effect in 2025. The economic stimulus policies in 2025 are expected to boost overall catering consumption, leading to a good recovery in the beer industry. Tsingtao Brewery (600600.SH) and Beijing Yanjing Brewery (007291.SZ) are recommended. Dairy products: The demand for dairy products is weak, but Inner Mongolia Yili Industrial Group (600887.SH) and New Hope Dairy (002946.SZ) are recommended due to positive factors. Seasonings: With the recovery of the catering industry and the sustained trend towards healthier consumer choices, the industry landscape is expected to continue improving. Companies such as Foshan Haitian Flavouring and Food (603288.SH) and others are recommended. Frozen foods: The leading companies in the frozen food industry demonstrate clear advantages for long-term growth. Anjoy Foods Group (603345.SH), Sanquan Food Co.,Ltd (002216.SZ), and others are recommended. Comprehensive food: Leading companies in various sub-sectors are recommended. Companies such as Angel Yeast Co.,Ltd. (600298.SH) and others are recommended. Risk Warning: Risk of sharp decline in high-end liquor prices; fluctuation in raw material prices; food safety risks.