China Galaxy Securities (CGS) released a research report noting a December pullback in the food and beverage index, attributing it mainly to the Mid-Autumn Festival's timing shift causing slightly slower November sales growth and delayed 2026 Spring Festival stockpiling potentially pressuring Q4 revenue growth. Within the sector, snacks, condiments, and pre-processed foods posted modest gains. For 2026, CGS maintains its outlook: new consumption trends will persist with internal rotation, while traditional consumption is poised for bottoming improvement. Key insights follow:

1. **Leading Liquor Firms Outline 2026 Strategies**: - *Countercyclical Measures*: Companies emphasized stabilizing price systems and channel profitability amid cyclical downturns, focusing on high-margin flagship products and incentivizing distributors. - *Long-Term Reforms*: Initiatives include cultivating new consumer segments (e.g., younger demographics), developing trend-aligned products (e.g., Moutai’s provincial blends, Wuliangye’s low-alcohol variants, Fenjiu’s fruit-infused Zhuyeqing), and embracing e-commerce/instant retail channels.

CGS anticipates the sector will bottom out in 2026, with narrowing demand declines and supply-side adjustments, highlighting long-term value and potential outperformance by firms advancing strategic reforms.

**Data Tracking**: - *Liquor Prices* (Dec 24, 2025): - Moutai’s Feitian case/bottle prices rose ¥20 MoM to ¥1,600/¥1,590 (down ¥720/¥660 YoY). - Wuliangye’s Eighth-Generation held at ¥850 (down ¥100 YoY). - Luzhou Laojiao’s Guojiao 1573 dipped ¥10 MoM to ¥840 (down ¥20 YoY). - Yanghe’s M6+ steadied at ¥540 (down ¥10 YoY). - *Materials*: Glass/PET/film prices fell 26.4%/3.8%/10.5% YoY; aluminum/paperboard rose 10.5%/4.9%. - *Commodities*: Sugar/flour/pork/sunflower seed prices dropped 15.8%/1.9%/23.8%/6.2% YoY; quail eggs/soybeans rose 12.4%/7.8%. Fresh milk edged up 0.3% MoM to ¥3.03/kg (down 2.6% YoY); GDT whole milk powder fell 2.5% MoM to $3,364/ton (up 15.6% YoY).

**Market Performance**: As of Dec 23, 2025, the food and beverage index fell 3.1%, underperforming Wind All-A by 4.9% and ranking 28th among 31 subsectors. Snacks (+3.6%), condiments (+3.0%), and pre-processed foods (+2.6%) led gains.

**Risks**: Slower demand recovery, intensified competition, channel reform delays, and food safety issues.