Zhongtai: Rapid development of new tea drink categories drives significant rebound in demand for liquid packaging equipment.

Zhongtai released a research report stating that in recent years, there have been significant structural changes in domestic beverage consumption. Benefitting from the popularity of healthy consumption concepts, new categories such as sugar-free beverages, tea drinks, and functional beverages have rapidly developed. Second- and third-tier brands continue to launch new products and accelerate production capacity construction, driving a significant rebound in equipment demand. Against the backdrop of resonating domestic and international market demand, the liquid packaging industry as a whole is showing a positive trend in revenue scale and profitability. China's liquid packaging machinery has multiple advantages when going global. After many years of development in the domestic market, domestic manufacturers have formed strong support for overseas competition in various aspects. Key points from Zhongtai include: Liquid packaging machinery is the core production equipment for fast-moving consumer goods industries such as food and beverages, daily chemicals, and seasonings, with most in the industry being sold as complete lines, such as the "blow-fill-seal" integrated solutions. China and other developed beverage markets mainly focus on line transformation and upgrades, with strong demand for ultra-clean lines/aseptic lines. Emerging markets in Asia, Africa, and Latin America are still in the stage of expansion, with relatively basic product demands. The economic life of domestically produced liquid packaging machinery is typically around 10 years. According to IMARC Group's forecast, the global packaging equipment market is expected to grow at a compound annual growth rate (CAGR) of 3.8% from 2024 to 2032. During the "14th Five-Year Plan" period, the average annual growth rate of China's packaging machinery industry is estimated to be around 8%. The industry's average profit growth rate reaches about 7%, with exports expected to reach 12 billion US dollars, significantly enhancing the industry's international competitiveness. Domestic market: In recent years, there have been significant structural changes in domestic beverage consumption, driven by the prevalence of healthy consumption concepts. Sugar-free beverages, tea drinks, and functional beverages have rapidly developed, with second- and third-tier brands continuously introducing new products and accelerating production capacity, leading to a significant rebound in equipment demand. Listed domestic companies are overall entering an expansion cycle, facing fierce competition in the domestic market, with steady growth expected in the future. Overseas market: Over the past decade, emerging markets overseas have been in a growth phase, accelerating even more after the pandemic. The growth in consumer purchasing power in emerging economies such as India, Southeast Asia, and Latin America has continued to boost the consumption of bottled water and sugary beverages. Post-pandemic, with the global industrial investment and supply chain restructuring, emerging countries have seen significant growth, entering into a logic of "increasing consumption + equipment upgrading." With significant cost-effective advantages and after-sales services, Chinese companies are accelerating their exports, maintaining a relatively low market share in overseas markets with vast room for incremental growth. Zhongtai believes that against the backdrop of resonating domestic and international market demand, the liquid packaging industry is showing a positive trend of simultaneous growth in revenue scale and profitability. China's liquid packaging machinery has multiple advantages when going global. After many years of development in the domestic market, domestic manufacturers have formed strong support for overseas competition in various aspects. Cost and lead time: Domestic equipment has lower acquisition and long-term maintenance costs compared to European and American brands, with smooth logistics to Southeast Asia and South Asia and shorter production lead times. This accurately matches the demand of emerging market customers for high cost-effectiveness and rapid production. Technical service stability: The automation level and filling speed of domestic companies are sufficient to meet the needs of emerging markets. Chinese companies have the willingness and ability to provide highly customized products, and they offer immediate after-sales support through technical guidance in cooperation with local dealers. Macroeconomic trends: Global industrial investment is moving towards emerging countries and supply chain restructuring. The upgrading wave in the food and beverage industry of countries along the Belt and Road, such as Vietnam, Indonesia, and India, is creating sustained demand for packaging equipment. This trend has been substantiated on the enterprise side. Represented by companies such as Guangzhou Tech-long Packaging Machinery and Jiangsu Newamstar Packaging Machinery, the scale of their overseas business has grown several times over the past decade, with a continuously increasing share of overseas orders and repeat customers, signaling that the industry's overseas expansion has entered a new stage of continuous penetration. Recommendations for related subjects: Guangzhou Tech-long Packaging Machinery (002209.SZ), Jiangsu Newamstar Packaging Machinery (300509.SZ), Hangzhou Youngsun Intelligent Equipment (603901.SH), Hangzhou Zhongya Machinery (300512.SZ). Risk warnings: Changes in international political situations; performance of related subjects falling short of expectations; risks of outdated information used in the research report; discrepancies in market size estimates.