The Zhitong Finance App learned that Open Source Securities released a research report saying that they are optimistic about the recovery and high-end development of the beer industry, and that El Niño may become an important catalytic factor in beer sales. Since April, demand has increased due to the restoration of the low-base food scene, and beer production has increased 21.1% year-on-year. The bank believes that with the restoration of the dining scene and the recovery of demand throughout the year, beer is still expected to maintain a high level of popularity. Actively pay attention to price increases brought about by compensatory consumption and channel inventory replenishment due to the resumption of catering during the 2023Q2 peak season. Demand in the beer industry is still booming. Coupled with restaurant recovery and scene restoration, beer is showing a sharp rise in volume and price, and the beverage market is also benefiting from hot weather and travel repairs.

Investment advice:It is recommended to buy Chongqing Beer (600132.SH); it is recommended to increase holdings: Tsingtao Beer (600600.SH), Dongpeng Drinks (605499.SH); Beneficial targets: China Resources Beer (00291), Nongfu Spring (09633), Yanjing Beer (000729.SZ), Pearl River Beer (002461.SZ).

The main views of Open Source Securities are as follows:

A beer recovery trend has been established, and high-end production is expected to accelerate

Benefiting from the recovery of ready-to-drink channels, the beer industry's overall sales volume is expected to increase by single digits in 2023. Among them, the night market channel will benefit more clearly, and the high-end will be more flexible. Price outlook, on the one hand, there is still pressure on raw materials, and companies may continue to raise prices; on the other hand, the industry is still in the high-end trend, which is likely to show that the structure of high-end wine will be upgraded, and the price of medium- and low-grade liquors will increase directly. Product upgrades are still the main direction in the beer industry. The low-end market is almost dominated by big brand companies, making it difficult to generate new entrants. The share of high-end craft beer is still low and scattered. Big wineries have the advantage of brands, channels, and large-scale production efficiency, and are more likely to participate in a capitalized manner. Beer companies' consumer education and consumption upgrade efforts were disrupted during the pandemic. In the context of a recovery in consumption, there is still room for beer price increases and upgrades.

The volume and price of beer have risen sharply, and demand for beverages is strong

Since April, demand has increased due to the restoration of the low-base food scene, and beer production has increased 21.1% year-on-year. The bank believes that with the restoration of the dining scene and the recovery of demand throughout the year, beer is still expected to maintain a high level of popularity. The industry is still doing well. Benefiting from the restaurant recovery and scene restoration, the trend of high-end upgrading is good. There may still be new changes in the high-end beer pattern, and consumption is expected to make up for itself as the peak beer season approaches. Soft drink production increased 9.5% year-on-year in April, benefiting from various factors such as scene restoration, resumption of tourist travel, and recovery in food demand. Actively pay attention to price increases brought about by compensatory consumption and channel inventory replenishment due to the resumption of catering during the 2023Q2 peak season.

Some regions have broken through historical high temperatures, and a wide range of high temperatures is likely to arrive

At the beginning of summer, hot weather occurred in regions such as North America and Asia, and some regions have already broken through historic high temperatures. According to expert analysis by the National Meteorological Center, 2023-2024 is likely to set a new record for the warmest in the world. According to the latest monitoring results from the National Climate Center, the tropical Pacific is currently in a neutral warm state, and it is expected that the equatorial Middle East Pacific will enter an El Niño state in the summer of 2023. Meanwhile, the World Meteorological Organization (WMO) predicts that the probability of an El Niño occurring between May and July is 60%, increasing to around 70% from June to August, and 80% from July to September. In 2023, many regions in Northeast China, North China, and Southwest China will warm up early. If strong El Niño events occur in summer and autumn, northern China is prone to high temperatures and droughts in summer and warm winters; in the southern region, the middle and lower reaches of the Yangtze River enter the rainy season too late, and the Yangtze River Basin and Jiangnan region are likely to experience flooding the following year; in addition, the number of El Niño typhoons and landings on China's coasts will decrease compared to normal years. At the same time, a wide range of warm winters was formed, and hotter weather continued to prolong.

Risk warning:Consumption recovery fell short of expectations, high-end sales declined, and market competition intensified.