Market review last week:
Last week (12.06-12.10) the food and beverage sector (Shen Wan) rose 5.47%, the Shanghai Composite Index rose 1.63%, Shenzhen Composite Index rose 1.47%, Shanghai and Shenzhen 300 rose 3.14%, the food and beverage sector won 3.83 points of the Shanghai composite index last week, ranked second in the 31 week of Baijiu 31 week growth.
Core view: volume reduction trend is not changed, Baijiu leading performance is very strong.
Baijiu plate: Baijiu quantity reduction trend does not change, high-end Baijiu continue to enjoy dividends. The Ministry of industry and Commerce announced the production of wine making industry in October 2021 in December 10th. In October, China’s Baijiu production was 59.2 million liters, down 0.2% from the same period last year. Under the influence of consumption upgrading, the price of Baijiu is rising, and the trend of high-end Baijiu price moving upward is particularly significant. The trend of high-end liquor industry is constantly advancing. According to the data of wine makers, the proportion of Baijiu Baijiu over 300 yuan has increased from 29.1% in 2018 to 40% in 2021. With the continuation of the trend of consumption upgrading, the Baijiu industry is expected to continue to continue to reduce the price trend. Under this background, the premium Baijiu will enjoy the dividends of the industry pattern change.
Beer sector: we are optimistic about the deep layout of Tsingtao beer, heavy beer and China Resources in terms of high-end. At present, the gradual implementation of the price increase in the beer industry will improve the pressure brought by the price increase of raw materials at the upstream cost end. At the same time, the price increase also shows that the overall competition pattern of the industry continues to be optimized, from the demand for scale to the demand for profit. Looking forward to next year, it is expected that under the overall logic of structural upgrading of the beer industry, with the weakening of cost side pressure and the continuous improvement of the epidemic situation, the head liquor enterprises with strong high-end capacity will show more brilliant performance.
Condiment sector: the logic of increasing the market share remains unchanged, and the leading growth has strong certainty. We believe that the difference between this round of condiment price increase and the past lies in two points: (1) the prosperity of the catering industry has recovered slowly (2) after the epidemic, condiments experienced two rounds of centralized replenishment of 20Q2 and 21Q1 and relatively high inventory. At present, we need to pay attention to whether the price transmission is smooth and its conduction speed. We suggest that we closely follow the enthusiasm of a group of merchants to make stock and the inventory of dealers in a few months after raising the price. The long-term logic for head enterprises to steadily expand market share is deterministic.
Investment advice
Plate allocation: Baijiu > beer > dairy products > snack food > condiment;
Baijiu: we should pay attention to high-end liquor enterprises Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , and Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Anhui Gujing Distillery Company Limited(000596) and Jiugui Liquor Co.Ltd(000799) with high potential development.
Beer: it is recommended to pay attention to Tsingtao Brewery Company Limited(600600) with high growth expectation in future performance;
Dairy products: it is suggested to focus on Inner Mongolia Yili Industrial Group Co.Ltd(600887) in the three aspects of production capacity, channel and product.
Risk tips:
Baijiu price rise less than expected, terminal demand fell, food safety issues.
