China Galaxy Securities: The autumn sugar atmosphere is relatively bland, focusing on market style changes.

China Galaxy Securities released a research report, stating that in early October, the market style switched and the food and beverage index saw a recovery. Snacks, beer, and health products were among the top gainers within the sector, with the trend of style switching expected to continue. Looking ahead to late October, the market will focus on third-quarter performance reports, with companies in the new consumer direction expected to have good performance. It is recommended to pay close attention to related high-quality stocks and sectors. Looking ahead to Q4 2025, the focus should be on two key points: 1) the year-end valuation switching market, focusing on targets with solid fundamentals in the new consumer direction; 2) with the improvement in PPI gradually transmitting to CPI, it is recommended to focus on undervalued cyclical sectors with supply clearance. Key points from China Galaxy Securities: Autumn Sugar Observation: The 2025 Autumn Sugar and Wine Trade Fair will be held in a hotel in Nanjing from October 11th to 15th. From an enterprise perspective, compared to the spring sugar fair, this time the participating companies are mainly small and medium-sized brands, with major brands bringing cross-border products. In terms of categories, the trend of health products continues to drive product iteration, with related products maintaining strong demand. Some traditional categories are seeing increased entry by companies, potentially reshaping the industry landscape. - Liquor: According to feedback from the Micro Liquor Forum, there was a weak recovery in consumption during the Mid-Autumn Festival and National Day holidays, but the overall pressure remained high. Considering that current demand is near freezing point and channel inventory remains high, it is expected to take some time for inventory to clear. - Beverages: NFC juice has a high layout density; there are still many new companies entering the coconut water market, with popular brands occupying prime exhibition space. In terms of snacks and beverages, companies like Bestore Co.,Ltd. are entering the beverage industry and showcasing a variety of new soft drinks based on market hot spots. - Snacks: Health is a key theme, with an emphasis on formula optimization in traditional categories. Some brands are introducing traditional Chinese snacks for therapeutic purposes. Companies are showcasing a variety of products such as canned fruit, meat snacks, and nut gift boxes. - Dairy Drinks: AD calcium milk is a hot category, with both major and small brands expanding their presence. Three Squirrels Inc., Bestore Co.,Ltd., and others are expected to benefit from changes in the competitive landscape following the negative publicity surrounding Wahaha. New categories like nut milk and eight treasure porridge are also being introduced. Data Tracking: Liquor prices have rebounded compared to September, and raw material costs are diverging. - Liquor prices: As of October 15th, the prices of Feitian whole box and bottled liquor were 1785/1760 yuan, up by 5 yuan/maintained from September 30th, but down by 535/505 yuan from the same period last year. Prices for other liquor brands also showed slight increases. - Packaging materials: As of October 15th, glass/PET/film prices were down by 4.6%/13.7%/9.1% compared to the previous year. - Raw material costs: Prices of sugar/flour/quail eggs/pork/soybeans were down by 10.3%/2.5%/8.8%/27.2%/0.8% compared to the same period last year. Market tracking: Most sub-sectors are showing positive returns. From October 1st to October 15th, the food and beverage industry saw a 1.3% increase, outperforming the Wind A-share index by +2.1%. Among 31 sub-industries, it ranked 14th. Eight out of ten sub-sectors saw positive returns, with snacks, beer, health products, and condiments and fermented products leading the way with increases of +3.5%, +3.1%, +2.9%, and +2.4% respectively. Risk Warning: - Risks of incomplete understanding of exhibition information. - Risks of slower-than-expected demand recovery. - Risks of intensifying industry competition. - Risks of downstream channel transformation below expectations. - Risks of food safety.