CITIC Securities: Focus on Policy and Price Increase Chain Beneficiaries; Optimistic on Ranches and Leading Enterprises with Strong Pricing Power

CITIC Construction Investment Research Report points out that the Two Sessions have sent a strong signal to boost consumption, with expanding domestic demand listed as the top priority for economic work in 2026. The report emphasizes increasing the supply of quality consumer goods and services, with the government work report highlighting “stimulating consumption in sinking markets.” Policies such as replacing old consumer goods and services are being continued and expanded, focusing on bottom-up allocation opportunities for core consumer assets. The retail chain transformation aligns with the policy direction of expanding domestic demand. On March 13, 2026, Moutai implemented multiple core personalized non-standard product consignment policies, a key measure for its multi-dimensional operational model. Product ownership remains with Moutai; distributors participate by paying a deposit, transactions are conducted via the iMoutai platform, and profits are earned through a fixed 5% service fee. Moutai has established an assessment mechanism to drive sales, with online and offline channels working together. This move solidifies its transition to direct-to-consumer (DTC) and reshapes the baijiu distribution ecosystem. Under input-driven inflationary pressure, attention is on targets benefiting from price increases, with confidence in upstream ranches. The resonance of meat and dairy prices in the second half of the year is expected, with beef prices continuing to rise. Some bulk retail stores reported nearly double-digit same-store growth in January-February, exceeding expectations. Currently, bulk snacks are in a period of improved competitive landscape and profit realization, with potential for single-store growth in 2026, presenting an investment opportunity in retail chain transformation.

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CITIC Construction Investment | Focus on Policy and Targets Benefiting from Price Increases, Optimism for Ranches and Leading Price-Setting Giants

The Two Sessions have sent a strong signal to boost consumption, with expanding domestic demand listed as the top priority for economic work in 2026. The report emphasizes increasing the supply of quality consumer goods and services, with the government work report highlighting “stimulating consumption in sinking markets.” Policies such as replacing old consumer goods and services are being continued and expanded, focusing on bottom-up allocation opportunities for core consumer assets. The retail chain transformation aligns with the policy direction of expanding domestic demand. On March 13, 2026, Moutai implemented multiple core personalized non-standard product consignment policies, a key measure for its multi-dimensional operational model. Product ownership remains with Moutai; distributors participate by paying a deposit, transactions are conducted via the iMoutai platform, and profits are earned through a fixed 5% service fee. Moutai has established an assessment mechanism to drive sales, with online and offline channels working together. This move solidifies its transition to direct-to-consumer (DTC) and reshapes the baijiu distribution ecosystem. Under input-driven inflationary pressure, attention is on targets benefiting from price increases, with confidence in upstream ranches. The resonance of meat and dairy prices in the second half of the year is expected, with beef prices continuing to rise. Some bulk retail stores reported nearly double-digit same-store growth in January-February, exceeding expectations. Currently, bulk snacks are in a period of improved competitive landscape and profit realization, with potential for single-store growth in 2026, presenting an investment opportunity in retail chain transformation.

Baijiu: Moutai’s consignment model implemented, ushering in a new market-oriented reform in the baijiu industry

On March 13, 2026, Guizhou Moutai officially launched a consignment policy for several personalized non-standard products. This is a key move for its multi-dimensional operation model announced in January—“self-sale + distribution + consignment + consignment sale”—and an important step in its market-oriented reform and DTC transformation. The products included in the consignment scope cover aged Moutai (15 years), boutique Moutai, Bingwu Year of the Horse zodiac liquor, as well as the full series of Feitian Moutai in small bottles, including the 53-degree series. These products are rich in variety and all are core personalized Moutai products, marking a substantial step in Moutai’s top-level design and implementation of market-oriented reform.

The consignment model has clear core rules and operational logic: product ownership always remains with Moutai; distributors act solely as channel service partners, paying a deposit to participate; all transactions are completed via the iMoutai platform. Original group-buy customers can scan the dedicated iMoutai QR code at exclusive stores to purchase, with prices strictly following the unified iMoutai standard. The profit model for distributors has fundamentally changed—from earning margins based on factory and retail prices to earning a fixed 5% rebate service fee based on the total product price. The per-bottle service fee for different products is explicitly defined, e.g., aged Moutai 15 years at 210 yuan per bottle, boutique Moutai at 115 yuan per bottle. This standard is calculated based on channel operating costs and service capabilities.

To ensure efficient operation of the consignment model, Moutai has also established supporting replenishment and performance assessment mechanisms, with deep integration of online and offline channels. The deposit paid by distributors based on the total consignment value remains valid long-term; replenishment is not required unless inventory drops below 70% of the initial stock, in which case replenishment can be applied for. If replenishment is not made for two consecutive months, the consignment cooperation is automatically terminated. This rule incentivizes distributors to improve customer acquisition and sales. The iMoutai platform serves as the core online channel, responsible for “efficiency management and reach,” while offline distributors focus on “conversion and service.” The use of exclusive QR codes creates a complementary loop between online transactions and offline pickup and experience, aligning with Moutai’s “five-channel” layout: wholesale, offline retail, online retail, catering, and private domain.

The implementation of the consignment model not only significantly reconstructs Moutai’s channel ecosystem but also provides a new direction for the baijiu industry. For Moutai, this model allows the brand to firmly control the industry chain, breaking the traditional channel arbitrage profit logic, promoting channel profits to return to service, and further solidifying its DTC transformation foundation. It also brings the brand value closer to actual consumer experience. Industry-wide, Moutai’s innovation in channel models, profit distribution, and price control reshapes the operational logic of the baijiu sector. Its “shared responsibility and shared benefits” channel cooperation concept will also promote the industry toward healthier and more market-oriented development.

Currently, the valuation of the baijiu sector has fallen to its lowest in nearly a decade, with the CSI Baijiu Index PE-TTM at about 17 times, at a ten-year low. Coupled with stable sales during the Spring Festival, gradually improving channel inventory, and high dividend support, the sector offers ample safety margins and long-term investment value. There is significant room for valuation recovery, making it a key focus for allocation.

Beer: China Resources Beer accounts for goodwill impairment of Jinsha, with post-impairment performance slightly exceeding expectations

China Resources Beer expects to achieve an operating profit of approximately RMB 2.92-3.35 billion in 2025, a decrease of 29.6%-38.6% year-on-year, mainly due to a goodwill impairment of about RMB 2.79-2.97 billion related to Jinsha Brewery. Restoring with a median impairment of RMB 2.88 billion, the adjusted profit for 2025 is RMB 5.8-6.23 billion, up 21.9%-30.9%, slightly exceeding expectations. The beer industry, benefiting from a low base in catering in 2026 and gradually stabilizing CPI, along with the World Cup boost, is expected to see a recovery in catering chain sales, driving on-premise beer consumption.

Dairy: Spring Festival dairy demand remains stable; focus on cyclical turning points in dairy industry

On March 11, New Hope Dairy announced plans to issue H-shares and list, aiming to deepen internationalization and enhance domestic competitiveness. In the first week of March, raw milk prices were 3.03 yuan/kg, down 1.6% YoY (narrowing decline), with dairy cow culling increasing month-over-month in February. In 2026, upstream supply is expected to continue its decline, with weak profitability in socialized ranches and natural culling of aging cows as core drivers. Leading dairy groups prefer M&A opportunities over expanding farms. The supply-demand balance of raw milk continues to improve, with the price cycle approaching a turning point. Sanhe股份, after organizational adjustments, personnel optimization, low-efficiency product elimination, and divestment of low-performing subsidiaries, shows positive effects. In 2026, domestic deep-processing capacity may see intensive investment, suppressing raw milk demand, promoting domestic substitution of raw materials for B2B, and opening vast market space.

Condiments & Frozen Foods: Spring Festival catering chain performance exceeded expectations; price competition may ease; new season yeast and molasses expected to release cost elasticity

Tianwei Food’s annual report shows 2025 revenue of RMB 3.449 billion, down 0.79%, net profit attributable to parent RMB 570 million, down 8.79%, affected by intensified industry competition, proactive adjustments, and inventory digestion. The new molasses season is winding down, with procurement prices expected to drop significantly. According to Fantang Technology data, in February, molasses averaged 752.61 yuan/ton (down 27.33% YoY, up 1.68% MoM). The latest transaction price on the platform in March reached 767 yuan/ton. The prices of key raw materials like yeast have dropped markedly, and Angel Yeast is expected to continue releasing profit margins in 2026. The company is also accelerating capacity expansion for yeast protein and extracts, opening a second growth curve domestically. Looking ahead to 2026, easing price wars will improve the competitive environment, shifting from price to value-based competition. Fragmented channels, emerging new retail, and increased restaurant chainization will favor high-quality channels, improving supply chain efficiency and flexible customization.

Soft Drinks & Snacks: Rising PET prices driven by oil prices raise concerns about beverage profits; short-term performance unaffected

During the Spring Festival, sales were strong, with bulk snack formats booming, becoming popular among young people returning home and an important channel for family shopping. Some leading bulk snack stores achieved double-digit growth, with new seasonal products and increased gift box offerings, though still mainly loose and bagged. Bulk snacks dominate the lower-tier market, with steady growth expected in 2026 through product iteration and store upgrades.

Foreign media reports that Chinese authorities are studying a consumption tax on high-sugar drinks, with no specific rate or implementation timeline yet. If implemented, this could prompt beverage companies to reformulate products from sugar and high-fructose corn syrup to sugar substitutes, benefiting alternative sweetener companies and influencing consumer preferences toward sugar-free drinks.

Demand recovery has been below expectations. Over the past two years, macro factors have slowed economic growth, impacting national income growth. Short- to medium-term income growth and consumption power may not recover as expected. Food safety remains a key consumer concern; despite industry efforts to improve quality control, the long supply chain involves many entities, posing ongoing safety risks. Cost volatility is also a concern; upstream commodity prices have fluctuated more recently. High-margin premium baijiu is less affected by raw material price swings, but lower-end spirits and condiments, with higher cost proportions, may see profit pressures from raw material cost changes.

(Source: Jiemian News)