: Food and beverage industry shows strong resilience with clear peak and off-peak seasons, actively recommending companies with changing competitive strengths.

Guotou Securities released a research report stating that although the food and beverage sector has rebounded in the past two weeks, the market remains cautious. In addition to concerns about midterm consumption, some investors are also worried about changes in off-season sales. Guotou Securities believes that the sector's valuation is still at the bottom, and excellent companies can still achieve excess returns, continuing to recommend the sector. The main points of Guotou Securities are as follows: The demand for consumer spending driven by residents as the main body can provide some support for the total annual consumption, thereby allowing high-quality companies to achieve returns and accomplish tasks. After the Spring Festival, the market's pessimistic expectations for consumption have been corrected, and market performance has also modestly increased. The bank believes that the consumption characteristics in 2024 will be different from those in 2023, overall resilience will be sufficient, differentiation will be significant, and grasping the pace and choosing from the bottom up will be more crucial. For the trend and pace of the whole year: strong resilience, clear off-peak season. Since 2022, residential consumption, represented by banquets and hospitality, has become the basis of consumer demand, demonstrating the resilience of demand. Consumer spending among residents has clear off-peak season characteristics, which depends more on the number of people and the atmosphere of consumption. It is more likely to erupt during festive periods and will be subdued in the off-season. Due to short-term pessimism about consumption demand, the relative inventory level at the industry level is not high (compared to the financial strength of channels and terminals). The current inventory is more based on self-assessment of capabilities, and the probability of sharp price declines or collapse in the off-season is low. Vendor control and guidance on prices are particularly important. The bank expects price stability this year to be stronger than in 2023, with the key purpose of price increases being to safeguard the interests of channels and terminals. The bank still believes that making a strong brand in a weak position is half the effort, while focusing on channels will be more valuable. The current industry dilemma lies in the lack of confidence in channels and terminals, and there are still thoughts of withdrawal (demand issues are the key contradiction that businesses cannot solve). In the off-season, control over prices is crucial, as it may reshape brand values and consumer perceptions. The bank believes that maintaining and attracting channels and terminals is crucial at this time, and price policies should not only enhance brand image but also consider channel interests and maintain channel integrity and even fight for more cooperation partners to enrich their own channels. Overall, the channels will be more active: channel parties are willing to negotiate with brand parties, shifting from channel downsizing in 2023 to brand replacement in 2024, squeezing growth among famous wines. Channel operators are not sensitive to policies. In the long run, brand parties and channel parties have been in a cooperative and confrontational state. During the industry's upward period, brand parties are dominant, while during the downward period, channel operators are willing to negotiate or even resist. In 2023, distributors generally entered a de-branding cycle due to cautious demand, while the Mid-Autumn Festival in 2023 and the Spring Festival in 2024 confirmed the resilience of demand, and channels will become more active. However, brands that cannot be monetized or cannot earn stable profits will still not be considered for agency representation, and rapid channel expansion is unlikely. It is expected that there will be a phenomenon of replacing weak brands with strong brands, which will reflect the squeezing between famous wines, and at this time, good channel service and price control will be the key to success. Risk warning: food safety issues, intensified industry competition, slower-than-expected demand recovery, unexpected increase in raw material costs, etc.