Xiangcai Securities: Facing innovation and changes in the traditional beverage industry, it is recommended to focus on packaged water, energy drinks and ready-to-drink tea

The Zhitong Finance App learned that Xiangcai Securities released a research report saying that the food and beverage industry is highly resilient as a required consumer core circuit. The current sector valuation is at a historically low level. Weak fundamental expectations such as a slowing pace of consumption recovery have been fully priced. Combined with clear main lines of consumer differentiation and structural upgrading, the long-term growth logic is clear, and there is room for valuation repair. Investments should balance certainty and growth, focusing on leading companies with deep brand channel moats, growing enterprises with active profit improvement flexibility, and maintaining segment leaders with profit improvement flexibility. Industry “buy” ratings. It is recommended to focus on two major directions: one is to establish channel barriers through massive outlets and fine management, and continue to promote new packaged water and energy drink faucets based on a platform-based model; the other is a ready-made tea drink faucet with huge stores, strong cost control capabilities, and excellent IP operation.

The main views of Xiangcai Securities are as follows:

Status: The new normal of “multiple models” in the Chinese beverage market

The past 10 years have been 10 years of changes in consumer demand, changes in marketing scenarios, and profound channel changes in the Chinese beverage industry. From 10 years ago, people's main criteria for choosing drinks were to understand thirst and comfort, to focusing on whether they are healthy, including sugar content, hydration, and vitamin supplements. Ready-made beverages continue to seize the Chinese beverage market. This personalized ready-to-drink forms a new beverage market with traditional beverages.

Product Dimensions: A “Dual Track System” for Health Claims and Sensory Enjoyment

The core trend in the beverage consumer market is the pursuit of health claims. Before 2014, it was an era of “selling sugar water”, where “taste first, moderate price” was the main focus. In recent years, the biggest change is that by 2024, the proportion of sugar-free beverages will rise from about 5% to over 45% (according to data from Intelligent Research Consulting). It can be said that healthy sugar-free drinks have become the biggest mainstream product.

High-quality sensory experience has become one of the core trends in the beverage consumer market at this stage, leading the development direction of the industry along with the pursuit of health claims. The beverage industry is facing not only how to innovate and survive in internal volumes, but also huge changes in consumption patterns and scenarios. Ready-made beverages have become the biggest competitor in the traditional beverage industry. Their advantages are divided into four categories: psychological value, consumers can witness the production process with their own eyes and generate psychological satisfaction; temperature and taste: they can freely choose the amount of ice and sweetness to get the best drinking experience in an instant; flexible combination: consumers can choose their own tea base and ingredients to create a taste that suits them; emotional connection: like Michelle's “Snow King” IP, brainwashing, and store atmosphere, creating warm brand interaction.

Channel and marketing dimensions: a “combo punch” under global integration

Omni-channel coverage: 10-billion-level enterprises must carry out three-dimensional channel coverage, using disputes over the breadth of channels and terminals as the foundation for revenue growth.

Online and offline integration: Online marketing is more equal than offline channels. It is necessary to focus on scenarios, focus on new online platforms, and complete differentiated iteration of channels.

Interactive marketing innovation: In the AI era, social media and channel transformation are opportunities for small and medium-sized beverage companies, and content and ability become the driving force for sales.

Risk Alerts

Policy progress falls short of expectations, and there is uncertainty about the pace of health policy promotion and standard-setting. For example, if regulations related to “sugar reduction” are implemented or consumer education falls short of expectations, it may affect the pace of development of the sugar-free and energy drink market segments. The macroeconomic recovery and recovery in consumer confidence fell short of expectations. The weak external environment will directly suppress ready-to-drink consumption scenarios and high-end demand, particularly affecting ready-to-drink tea and innovative products with higher prices. Risk of price fluctuations of core raw materials.