Zhongtai: The sales performance of baijiu brands is diverging, and the prospects of mass-market brands are promising.

Zhongtai released a research report stating that the high-end liquor sector has performed well in sales performance since the Spring Festival, with leading brands showing stronger certainty. The leading brands in the soft drink sector are expected to continue to seize market share with their platform advantages and channel barriers. The demand structure of the seasonings and frozen foods sector is experiencing a structural recovery, with leading companies having cost transmission capabilities. The dairy sector is speeding up inventory turnover in the upstream, and raw milk prices are stabilizing. The beer sector is about to enter the peak season, considering the low base, sporting events, and gradual recovery of restaurant traffic, demand is expected to marginally recover. Zhongtai's main points are as follows: Liquor sector: Sales performance differentiated, high-end liquor performing well During the Spring Festival, the sales performance of the liquor industry showed a "dumbbell-shaped" differentiation in price bands, with high-end and mass market price bands showing relatively stable performance, while the mid-range price band saw a more significant decline due to the slow recovery of B-end government and business demand. Currently, the liquor industry is still in a period of clearing inventory, with a shortfall in sales compared to the previous year during the Spring Festival. In terms of sales performance, the report believes that since the first quarter, there has been a noticeable differentiation in sales performance among liquor companies, with leading companies performing significantly better during the Spring Festival, Maotai reshaping consumer demand through the iMaotai channel and showing positive sales performance before the festival, driving wholesale prices up. Feedback from Wuliangye Yibin channels shows that sales growth during the Spring Festival exceeded receivables, helping digest some of the excess inventory, and overall channel conditions are relatively benign. Among the mid-range price bands, Fen Jiu's sales performance in the first quarter was relatively good, providing support for first-quarter performance. Regionally, Jiangsu King's Luck Brewery Joint-Stock saw strong receivables in the first quarter driven by price hikes. Soft drinks: Industry sentiment remains strong, with leading brands outperforming Overall, the soft drink industry sentiment remains strong, but there is structural differentiation within the industry. The report believes that leading brands are expected to continue to seize market share with their platform advantages and channel barriers. Eastroc Beverage: Since the first quarter, the sales of special drinks have been steady and maintaining stable growth, and the hydrating product, Bu Shuilai, is expected to continue its high growth trend of the past 25 years. Considering the misdistribution of the 26th Spring Festival and early cost investments, the company is expected to show a bright revenue and profit performance in the first quarter. Jilin Quanyangquan: Considering the active planning of the company in 2026, sales planning is expected to increase by 33% year-on-year to 2 million tons in 2026, and the company is expected to continue its high-growth trend in the second half of last year. Mass market: Sub-segments showing bright spots 1) Frozen foods: Restaurant performance is recovering, industry sales performance is improving, leading companies are enjoying increased market share, and profit margins are continuing to improve; 2) Seasonings: Basic seasonings are stable, with new compound seasonings coming out frequently, stable demand from B-end businesses, and growth driven by emerging C-end channels; 3) Dairy products: The Spring Festival mismatch catalyzes growth, gift box products perform well, and combined with CPI increases, dairy product prices are expected to recover, with a focus on low-temperature milk and cheese products; 4) Beer: Since Q4 2025, beer has entered the traditional slow season, with normal sales decline, and leading companies actively reducing inventory, resulting in relatively flat sector performance. Outlook for 2026: Revenue side: Considering the low base due to the impact of the 25th liquor ban, along with the recovery of restaurant traffic and the boost from the World Cup, demand in the peak season is expected to marginally recover; Profit side: 1) In terms of costs, the cost advantage of 2025 is significant, and it is expected that the cost dividend will weaken in 2026, but ongoing cost reduction by leading companies is also expected to bring optimization space; 2) In terms of structure, although industry structure upgrading is slow, leading companies are still trending upward, as seen in Yan Beer's core product U8 sales growth in the first quarter of 2026. The beer consumption peak season is approaching, and expectations are for stable prices. In addition, the new beer consumption tax regulations will have a relatively limited impact on listed companies, potentially further increasing industry concentration. 5) Snacks: Industry sentiment remains positive, the transformation of snack channels continues to pay off, star products are still in a rapid growth phase, and with the Spring Festival mismatch, most companies are expected to have a good start to the year. In addition, considering the mild winter, leading convenience store chains have shown good store opening pace in the first quarter, with positive same-store trends, and it is expected that operating performance in the first quarter of 2026 will be strong. Risk warning: Risk of sample bias in channel research; risk of outdated data updates; slower-than-expected recovery in end demand; intensifying industry competition; unexpected pricing implementation delays; food safety risks.