Huachuang Securities: Liquor market stock game, structural optimization and category diversification coexist, and liquor has built and repaired, or will still be the mainstream domestic wine

The Zhitong Finance App learned that Huachuang Securities released a research report saying that looking at liquor restoration in the short term, the long-term opportunity is to focus on liquor leaders and potential pioneers in the wine segment. Liquor may continue to be the mainstream domestic wine, but the stock era is difficult to reverse. Referring to the experiences of Japan, the US, and Western Europe, the first is the pre-blending (RTD) circuit. The three regions have unanimously verified its high-certainty growth after the industry matures. Domestic Bairun has completed early education, and may be a catalyst for traditional wine companies to enter the market, so you can pay attention to the RTD layout progress of leading wine companies. Second, moderation. Categories such as craft beer and alcohol have room to penetrate young and female consumers, and pioneers with existing brand accumulation and channel capabilities need to be selected. The third is the ability to build a category matrix. The experience of Japan's Suntory and Asahi shows that the companies that win in the shrinking market all operate across categories, and the ability of a single wine variety to withstand cycles is weak.

The main views of Huachuang Securities are as follows:

The current difficult situation of alcohol in China: the volume and price of mainstream alcoholic beverages have all been adjusted in depth

Looking back over the past ten years, consumption of mainstream local alcoholic beverages, liquor and beer has continued to shrink. In recent years, sales have also begun to decline, and volume and price are undergoing deep adjustments. The main influencing factors include strengthening health concepts, changes in social scenarios, changes in population structure, and adjustments in statistical caliber. Looking backwards, the short-term report of the liquor industry is still bottoming out, and it is expected to gradually recover under the low 26Q3 base; the mid-term window is Maotai sales and prices for the Spring Festival next year; in the long run, based on mature overseas market experience, China's per capita pure alcohol consumption is expected to gradually decline from around 3 liters in 2024 to the 2.5-3 liter range, with pure alcohol sales bottoming at the bottom of about 200-2.5 million tons. The industry will enter a new stage where stock game, structural optimization and category diversification coexist.

The joint experience of Japan, the United States, and Western Europe shows that diversification is an inevitable trend after the alcohol industry matures. The mainstream path is ready-to-drink, low health, and penetration into emerging foreign wines/scenarios

Japan experienced a 30-year contraction in total alcohol consumption after the collapse of the bubble economy in the 1990s, completing multiple rounds of iteration in the shrinking market, from sake to beer, shochu, and liqueur to RTD; the overall per capita alcohol consumption in the US is at a high level, but structurally, it has gone from being a single beer family to the revival of spirits, the rise of craft beer, and the expansion of RTD; Western Europe entered a long cycle of moderation and category change, verifying ready-to-drink and low levels of ready-to-drink with the growth of spirit-based RTD An alternative to traditional spirits.

The diversification path can be seen from the experiences of Japan, the United States, and Western Europe: 1) pre-blending (RTD) is an inevitable product of the maturing spirit industry, and the economic downturn is an accelerator; 2) demagmentation is a long-term trend, including alcohol-free and low-alcohol paths, which have higher ceilings; 3) the penetration of foreign alcoholic beverages relies on a systematic approach, which can be summarized as five steps of timing selection, differentiated positioning, localized production, capacity transfer, and quality reversal.

Looking at China, driven by changes in the economic and industrial structure, alcohol may usher in an era of diversification. Rice wine with local advantages and whiskey with global penetration are expected to break through

The underlying support for the diversification of domestic alcoholic beverages is the structural changes in the economy since the 2010s. Emerging industry factors have changed from political and commercial relationships to “business style and technology,” post-90s and younger generation career determinants have changed from “relationships” to “KPIs and professional skills”, and alcohol also needs to shift from “social services” to “pleasuring oneself” and “showing personality” functions. Therefore, the pattern of alcoholic beverages tends to be scattered and diversified, and products tend to be ready-to-drink and low-grade. On the evolutionary path, many local wine varieties are currently small in size but have excellent category attributes. Among foreign varieties, whiskey production capacity layout is relatively fast, and they all have good potential for growth. However, whether the potential of the category can be stimulated and successfully commercialized still depends on the corporate style of play, that is, whether it can use unique and individual products to provide comfort and personality to highlight value for the new generation.

See specific categories

The differentiating advantage of rice wine is its suitability for low, warm drinks, and meals, and the bottleneck is limited to niche high-end people and nighttime channels. In the future, it depends on whether local companies can surpass quality and break through daily channels to expand the consumer base; alcohol has both cultural attributes and low level characteristics. Overseas liqueurs and flavored wines have proven their potential for popularization, and the domestic product positioning is still unclear; pre-blended wine is a high-certainty track that has been uniformly verified by Japan, the United States, and Western Europe. Bairun completed early education and catalyzed early education. The agent may be the entry of a traditional wine company; craft beer is beer Personalized upgrades, but due to the degree of product standardization and weak channel scale effects, the concentration ceiling is expected to be lower than that of industrial beer.

Risk warning: Industry demand continues to be sluggish, liquor prices fall sharply, diversified layout falls short of expectations, etc.