Central China: The food and beverage sector is undergoing growth in the central area, with channel and product innovation driving development.

Central China released a research report stating that the revenue growth of food and beverage listed companies in 2025 is expected to remain at a single-digit level, slightly higher than the industry overall. Based on the macro situation, the bank believes that the cost environment in 2025 will still be favorable, with listed companies facing relatively low cost pressures. In a period of significantly slowed revenue growth, this will support business profits. In 2025, the bank recommends focusing on investment opportunities in the dairy industry, beer, soft drinks, health products, and snacks sectors. Key points from Central China are as follows: Since 2020, there have been significant changes in the fundamentals of the food and beverage industry. The industry's past high growth has significantly declined, progressing from high growth to reasonable growth, with further narrowing expected in 2024. In addition, due to the slowdown in growth and sluggish product structure upgrades, the shareholder return on food assets has fallen compared to historical levels. Nevertheless, there are emerging and flourishing new markets within the industry, such as prepared foods, baked goods, health products, tea drinks, etc. These niche markets represent a major trend of consumer upgrading and reflect the development characteristics of food and beverage consumption transitioning towards enjoyment and entertainment. Revenue growth in the food and beverage sector has generally slowed down since 2020. In the first quarter of 2024 and 2025, the revenue growth of listed food and beverage companies further declined. With the background of decreasing PPI, the industry's cost advantage is highlighted, driving up the gross profit margin of most food and drink items. However, due to sustained decline in sales growth, the bank believes that the profitability of the food and beverage sector has increased since 2025, mainly due to the decrease in upstream prices rather than internal product structure upgrades, being driven externally rather than internally. Additionally, various expenses such as sales, management, and finance within the food and beverage sector have been declining long-term. Despite deteriorating sales growth, the ROE of listed food and beverage companies significantly increased in 2023 and 2024 due to rising gross profit margins and declining expenses. However, excluding liquor and beer, the overall net asset return rate of the food and beverage sector has decreased. The food and beverage sector has experienced four consecutive years of decline in earnings. The food and beverage sector has experienced four consecutive years of decline in earnings from 2021 to 2024. The performance of the food and beverage sector in the secon...