Orient: Bottoming characteristics of baijiu are becoming increasingly clear, and medium- to long-term allocation value is gradually emerging.

Orient: Bottoming characteristics of baijiu are becoming increasingly clear, and medium- to long-term allocation value is gradually emerging. Orient released a research report stating that the bottoming characteristics of baijiu are becoming increasingly clear, and it recommends selecting leaders with strong corporate governance capabilities and earnings certainty. The bank believes the industry remains in a bottom-building phase where destocking comes first and price stabilization follows; with next year's Spring Festival falling earlier and the stocking window being shorter, channels will not significantly stock up for a strong start to the year, and it expects the year-on-year decline in Spring Festival sell-through to narrow but still face pressure. However, with channel inventories at low levels and wholesale prices stabilizing, medium- to long-term allocation value is gradually emerging. Orient's main views are as follows: The scale and popularity of this autumn's sugar and liquor fair fell significantly compared with last year and this spring's fair, while health-oriented and lower-alcohol products became a structural highlight This sugar and liquor fair covered an exhibition area of about 180,000 square meters with more than 3,500 exhibitors, a marked contraction compared with the 2025 autumn fair (planned 200,000 square meters, about 4,000 exhibitors) and this year's Chengdu spring fair (325,000 square meters, more than 6,600 exhibitors). At last year's autumn fair, famous liquor brands such as Moutai, Yanghe, and Fenjiu made concentrated appearances, whereas this year most leading famous liquor brands did not participate in hotel exhibition booths; aisles at hotel exhibitions were sparsely populated, distributors focused mainly on clearing inventory and reconciling accounts, took a wait-and-see approach to product selection, and made very few on-site payments. The overall price band of exhibits shifted downward, with more light-bottle liquor; the number of exhibitors of herbal liqueur, medicinal-and-food-homologous tonic liquor, and low-alcohol liquor increased significantly, while non-alcoholic beer, sparkling yellow rice wine, and others made concentrated appearances. Demand on the industry side is still bottoming out, but channel destocking has been relatively thorough and sentiment is better than last year The bank's industry survey estimates that baijiu sell-through during the dual festivals still declined year on year, with government and business banqueting and gift-giving demand relatively weak, the sub-high-end price band under the greatest pressure, and the sub-RMB 100 segment relatively stable; demand pressure has shifted from policy to consumer spending capacity. Distilleries generally no longer push inventory onto channels, with assessment shifting toward bottle-opening sell-through and price stabilization, and third-quarter collections generally under pressure; distributors adopt a quick-in, quick-out approach, with channels concentrating toward leading large distributors; tobacco and liquor stores do not stock up in advance and replenish as needed. The bank expects terminal inventories have fallen to low levels while the distributor segment is still destocking, mainstream single-product wholesale prices have not seen a sharp pullback after the holiday, the consumer side is weakly stabilizing, and the inflection point still awaits verification during the Spring Festival. During the dual festivals, leaders and the mass price band were relatively stable, while divergence in the sub-high-end and sauce-flavor liquor segments intensified The bank expects Moutai to have performed most steadily during the dual festivals, with Feitian sell-through steady with slight growth and wholesale prices stabilizing after the holiday, while non-standard products came under some pressure; Wuliangye Yibin traded price for volume, with wholesale prices falling to around RMB 760 but share increasing; Guojiao adhered to price support, with short-term sales contracting markedly; Fenjiu and Jiannanchun saw relatively stable volume and price. Among regional liquor companies, the bank expects Jiangsu King's Luck Brewery Joint-Stock to achieve slight growth in bottle openings on the back of mass-market products such as Danya; Yingjia benefited from relatively good banquet performance, Gujing faced pressure on collections with relatively high channel inventories, and Yanghe focused mainly on reducing volume to stabilize prices. Qinghua Lang, Junpin Xijiu, and others saw price inversion, while small and medium-sized sauce-flavor liquor companies declined markedly. Risk disclosure Macroeconomic and consumer demand recovery falling short of expectations; intensifying industry competition and price system declining beyond expectations; channel destocking falling short of expectations; the survey sample is limited and may not reflect the full market picture.