China Galaxy Securities: In May, the food and beverage sector showed a clear structural market trend, with the beer sector benefiting from high dividends, low valuations, and seasonal catalysts

According to the Zhitong Finance APP, China Galaxy Securities released a research report stating that the food and beverage sector showed a significant structural market in May, mainly due to the overall recovery pace of the industry remaining relatively stable, with the market focusing on α opportunities brought by the resonance of new channels and new categories (new consumption). Looking ahead to June 2025, the firm believes that the structural market will continue, and it is recommended to focus on the following in the consumer goods sector: 1) Growth stocks in new categories and new channels; 2) Pay attention to the rebound space of traditional consumption leaders, with the beer sector benefiting from high dividends + low valuations + seasonal catalysts, and the beverage sector also benefiting from seasonal catalysts.

The main points of China Galaxy Securities are as follows:

Domestic Beer Companies: Overview of Beverage Business Expansion

In recent years, as the domestic beer industry enters a new development stage and consumer demand becomes increasingly diversified, domestic beer companies have begun to actively explore beverage businesses. From a product perspective, carbonated drinks and functional beverages are the main exploration directions; from a strategy perspective, they tend to leverage their own resource endowments, initially investing in advantageous regions and dining channels.

1. Yanjing Brewery: The "Jiulongzhai Sour Plum Soup" has been in operation for over 20 years, recently launching the soda brand Beisite Jia Bing, with plans to develop it into a national beverage product; 2) Chongqing Brewery: Following Carlsberg's global strategy, it is laying out soda and functional beverages in regional markets, such as launching Dali Cang'er soda in Yunnan by the end of 2024 and introducing Tianshan Fresh Fruit Orchard orange-flavored soda and electric energy drinks in Xinjiang and Chongqing in Q2 2025. 3) Tsingtao Brewery: Previously laid out health products such as drinking water and soda water, in 2025, Tsingtao Group acquired Qingdao Beverage Group, introducing well-known products like Baihua Shecao Water, Laoshan Mineral Water, and Laoshan Cola; 4) China Resources Beer: Launched the "Xiao Pi Qi" series in 2021, including pineapple passion fruit yogurt flavor and peach flavor. In the short term, the beverage business currently accounts for a low proportion of total revenue for beer companies and is still in the early stages of development; however, in the long term, referencing the experiences of Europe, America, and Japan, expanding the beverage business is an important way to support beer companies in seeking a "second growth curve."

Overseas Beer Giants: Beverage Business Contributes Significant Revenue and Profit

1. European and American beer companies: Carlsberg and Anheuser-Busch InBev, with non-beer business accounting for 19% and 12% respectively, where the beverage business involves carbonated drinks and energy drinks, primarily through mergers and acquisitions + agency sales. Since the acquired targets already have mature production experience and operational capabilities, entering the group can directly boost revenue levels, and the synergies from business integration help save costs, thus achieving efficiency improvements.

2. Japanese beer companies: Suntory, Kirin, and Asahi have all developed into comprehensive business groups, with non-alcoholic business revenue accounting for 66%, 54%, and 40% respectively, where the beverage business involves carbonated drinks, tea drinks, coffee, yogurt drinks, and packaged water, primarily sourced from resource integration + endogenous cultivation. As the company continues to cultivate and the market for categories matures, it gradually releases its contribution to revenue.

Fundamentals Tracking: Most Raw Material Prices Continued to Decline in May

Packaging materials, as of May 29, 2025, the prices of PET/paper boxes/glass/packaging film/aluminum materials decreased by 13.8%/-2.1%/-42.5%/3.5%/-3.4% year-on-year, with material cost dividends continuing to be released. Raw materials, the prices of white sugar/soybeans/flour/quail eggs/pork decreased by 8.0%/-6.4%/-3.3%/-11.0%/-2.4% year-on-year; Palm oil prices increased by 4.2% year-on-year, with the growth rate narrowing compared to the previous month. The import price of barley in April 2025 decreased by 6.9% year-on-year.

Market Tracking: Significant Structural Trends in Food and Beverage in May

From May 1 to May 31, 2025, the food and beverage industry index fell by 0.1%, with an excess return of -2.5% compared to the Wind All A Index, ranking 26th among 31 sub-industries. There was a divergence in the performance of 8 sub-sectors, with health products, soft drinks, baked goods, pre-processed foods, fermented seasonings, and beer sectors performing strongly, with increases of +14.7%, +10.2%, +7.9%, +6.4%, +4.9%, and +3.6%, respectively.

Risk Warning: Risks of demand recovery falling short of expectations, intensified industry competition, downstream channel transformation effects not meeting expectations, and food safety risks