Goldman Sachs released a research report indicating that China's consumer staples sector exhibited a "divergent performance between the first and second halves" last year, with the anti-corruption policy announced on May 18 serving as a critical turning point. Prior to the policy's implementation, the sector demonstrated stable performance, with certain companies achieving growth through product cycles, market share gains, or stable shareholder returns, such as Nongfu Spring (09633), Yantai China Pet Foods (002891.SZ), WH Group (00288), Tingyi (00322), and Budweiser Brewing Company APAC (01876). Looking ahead to 2026, Goldman Sachs believes the sector's recovery will still depend on the reflation process and policy direction, with expanding domestic demand now being the primary task, focusing on three key themes: (1) bottoming out or trend reversal; (2) channel restructuring and the impact of private labels; and (3) competitive dynamics and cost trends. The firm believes the sector has the potential to bottom out in the second half of the year, particularly with the cyclical recovery of spirits and dairy, as well as growth in ready-to-drink occasions such as beer, condiments, and prepared foods. Spirits are expected to gradually recover in the second half of this year, mainly due to a rebound in business entertainment and high-end demand, although channel inventory pressures still need to be addressed in the first half. The dairy industry, influenced by ongoing upstream production cuts and policy support, may achieve a supply-demand rebalancing in the second half. Categories related to catering, such as beer, condiments, and prepared foods, will benefit from a low base effect and cyclical recovery. Goldman Sachs points out that industry competition is intensifying and differentiation is significant. Competition in the food and beverage industry is fierce, requiring companies to increase promotional efforts and new product launches; the beer industry is facing intensified price competition; while the competitive environment for leading companies in condiments and prepared foods is relatively favorable. Goldman Sachs recommends still focusing on growth stocks in the first half of 2026, and then gradually shifting towards value stocks in the second half as bottoming-out opportunities emerge. Overall, Goldman Sachs is optimistic about the long-term growth potential of the beverage industry and holds a more positive view on the recovery of condiments, prepared foods, and the dairy sector.