CMSC: The Baijiu industry is still in the process of finding the bottom, with a focus on cost transmission in the mass market segment.

CMSC released a research report stating that overall, the number of participating companies and individuals in the 2026 spring sugar conference is less than in previous years. The focus of companies has shifted from channel traffic competition to user operation and cultivation. The white wine sector is experiencing increased sales differentiation, with wholesale prices stabilizing. Distributors are cautious but calm. 2026 may become a critical year for the industry. In the first half, the focus should be on inventory clearance for liquor companies and repair of channel profits. Companies that adjust early in the second half of the year are expected to see marginal improvement. Competition in the industry will gradually shift from channels to consumers, with a focus on building and improving consumer cultivation systems to seize an advantage in the next cycle. In the mass market sector, the catering chain has improved significantly in Q1, dairy products have seen slight growth, and the prosperity of beverages and snacks continues. CMSC's main points are as follows: The industry is still at the bottom, and the spring sugar industry feels quiet. In 2026, the number of participating companies and individuals in the spring sugar conference is less than in previous years. Companies like Maotai, Laogao, Wuliangye Yibin, and Fenjiu have cancelled hotel exhibitions and distributor conferences, shifting the industry's focus from channel traffic competition to C-end user operation and repeat purchase cultivation. Top companies are focusing more on precise connections at the main venue, consumer experience, and brand value transmission. White wine sector: Increased sales differentiation, stabilizing wholesale prices, distributors are cautious but calm Overall, the white wine industry is still in the process of bottoming out, but top liquor companies are showing positive sales signals. Maotai is leading the stabilization, and Wuliangye Yibin is expected to follow suit. Post-holiday demand is returning to normal, but wholesale prices show some resilience. Considering that many liquor companies have already seen significant price corrections and have limited downside, 2026 is expected to be a stabilizing year for prices. Apart from a few companies, major liquor companies are actively clearing inventory, and distributor inventories are gradually entering normal ranges. The industry is focusing on clearing liquor inventory and repairing channel profits in the first half of the year. Companies that adjust early in the second half of the year are expected to see marginal improvement. In the second half, industry competition will gradually evolve from channels to consumers, focusing more on building and improving consumer cultivation systems to seize an advantage in the next cycle. Mass market sector: Improvement in catering chains, slight growth in dairy products, continued prosperity in beverages and snacks Looking at specific segments, 1) catering chains: key companies have shown improvement in Q1, with short-term costs already locked in. 2) Dairy products: Inner Mongolia Yili Industrial Group, Mengniu Dairy, and New Hope Dairy have shown positive sales feedback in Q1. 3) Beverages: Longchuang, Nanfu Spring, and others have shown continued prosperity. 4) Snacks and convenience stores: Key stores have shown improvement in Q1, actively exploring new store formats like convenience stores to promote expansion in new areas and increase growth potential. Investment recommendations: White wine industry is bottoming out, mass market focuses on cost transmission We continue to recommend 1) improving cyclical catering chains (seasonings, beer), focusing on Foshan Haitian Flavouring and Food A+H, YIHAI INTL, Beijing Yanjing Brewery, Tsingtao BreweryA+H, and CHINA RES BEER. 2) Dairy industry supply and demand improvement, focusing on leading performance restoration, recommending Inner Mongolia Yili Industrial Group, MENGNIU DAIRY; and keeping an eye on upstream pastoral YOURAN DAIRY. 3) Beverage leaders continue to recommend NONGFU SPRING and CR BEVERAGE. 4) The white wine sector has returned to the bottom buying point, with Kweichow Moutai maintaining a sufficient position and recommending Wuliangye Yibin and Shanxi Xinghuacun Fen Wine Factory. Risk warning: Sales in the future may fall short of expectations, pricing may not perform as expected, intensifying competition, rising costs, and channel research data may not reflect the overall situation.