CITIC Securities' latest analysis! Emphasizing investment opportunities in the consumer sector

Recently, CITIC Construction Investment Securities held its 2026 Major Consumer Strategy Conference. The meeting gathered over 50 listed companies, numerous industry experts, and more than a thousand institutional investors to jointly analyze investment opportunities across various segments of the consumer industry.

Attendees stated that the current consumer sector is experiencing challenges of “oversupply and demand differentiation.” With expanding domestic demand listed as the top priority for economic work in 2026, coupled with many core consumer assets potentially bottoming out in their cycles, and new consumption patterns continuously emerging, it is important to pay attention to investment opportunities in the consumer sector.

The liquor industry was a focal point of this strategy conference. Yang Ji, head of the Consumer Group at CITIC Construction Investment Securities and chief analyst of food and beverages, predicted in his “Top Ten Predictions for the Year of the Horse” that the liquor industry may see a “decade-long bottoming cycle,” with leading companies already showing signs of recovery.

Hou Shuai, founder of Mingrui Consulting, stated that the liquor industry is currently in the bottom phase of its cycle. Consumption of liquor continues to shrink, and the industry has undergone a prolonged adjustment. After demand stabilized in 2023, it has continued to decline, with an expected 10% decrease in 2026. On the supply side, inventory levels are expected to be light by 2026. He believes that industry competition is characterized by squeezed growth, volume-based competition, and extreme differentiation, with a historic淘汰 process intensifying, leading some brands to be lost permanently. The key to future industry success lies in building momentum, stabilizing supply, long-term planning, and seizing the right opportunities.

The dairy industry also faces cyclical pressures. Chen Bing, chief economist at the China Dairy Industry Association, noted that the oversupply of raw milk has not fundamentally changed, but is expected to reach balance by the second half of 2026. The industry’s future depends on focusing on industrial upgrading, going global, and developing towards deep processing. Meanwhile, barriers in new tracks like low-temperature fresh milk are weakening, and new entrants are entering. Long-term development relies on policy support, with significant room for growth in per capita milk consumption. Different sub-sectors will develop towards differentiation and functionality.

Despite overall pressure, the strategy conference analyzed growth opportunities from various dimensions, providing investors with pathways to find incremental growth in a stock market.

Clearer new consumption drivers. Yang Ji emphasized that health, functionality, and emotional value are core drivers for breakthrough in consumer product categories. He believes emotional value has become a hard currency in consumer decision-making, and that experience economy and IP-driven consumption are transforming offline retail from a “transaction space” into an “emotional space.”

Alex, partner at Sullivan China and head of consumer division, further explained that the snack industry is entering a new era of category innovation. Currently, the snack industry is shifting from a single “flavor-driven” approach to one centered on category innovation as its core competitive advantage. Trends such as health, emotional satisfaction, new Chinese styles, functionality, and flexible meals are emerging as new directions for snack innovation.

Channel transformation is gradually deepening, with consensus on the trend of retail discounting and segmentation. Lian Jie, an expert in retail discounts and bulk snacks, stated that the market has shifted from supply shortages to oversupply, making discounting transformation a key focus. Discounting aims to control distribution costs through product selection and direct procurement, with initial success seen in department stores and fast-moving consumer goods. The potential for hard discounts in alcohol and regional multi-category retail is promising, while fresh produce does not require discounting transformation.

Additionally, a clear emerging track has been identified. The conference highlighted several promising growth directions. First is high-end consumption. Yang Ji predicts that, driven by wealth effects, high-end consumption will continue to strengthen in 2026. Second is AI smart hardware, which is expected to see explosive growth in new categories and form smart ecosystems around households. Third is sinking markets. Yang Ji noted that the nationwide wave of opening township chain stores signifies a new stage for brands expanding into county and rural towns. Fourth is industries benefiting from exchange rate changes. Based on expectations of RMB appreciation, raw material import-dependent industries are viewed favorably.

Author: Yan Liu Meng

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