The hardest-hit sector rebounded today.
Kweichow Maotai and Wuliangye Yibin rose today, driving rebounds in the Liquor ETF and the Food & Beverage ETF.
The Food & Beverage ETF tracks the细分食品index, which includes leading companies across various sub-sectors such as baijiu, dairy products, soft drinks, condiments, and snack foods. Its constituent stocks include Kweichow Maotai, Luzhou Laojiao, Haitian, Yili Group, Dongpeng Beverages, and Angel Yeast.
Year-to-date, the CSI 300 Index has risen by 16.82%, while the food and beverage sector has declined by 8.05%, ranking last among Shenwan's primary industries. Over a longer timeframe, since the peak in February 2021, the food and beverage sector has fallen by more than 50%, second only to the beauty care sector, while the CSI 300 has dropped by 21%. This is not merely a correction but a prolonged period of market clearance.
Year-to-date, the Liquor ETF has fallen by over 10%, while the Food ETF and the Food & Beverage ETF have dropped by more than 6%.
The core variable behind today’s rebound is: Maotai's supply control measures.
Following the wholesale price of Feitian Maotai falling below the official guideline price of RMB 1,499, Kweichow Maotai swiftly intervened with new supply control policies.
Recent market reports indicate that Kweichow Maotai is implementing a combination of short-term and medium-to-long-term supply control measures. In the short term, shipments to distributors will be suspended in December (except for pre-paid orders), with resumption planned for January next year. Over the medium to long term, the company intends to reduce the allocation of non-standard products. Under current market conditions, this appears to be an active adjustment to stabilize supply and maintain the pricing structure.
The impact was immediate, with prices recovering losses from the past two months within just two days. Data from third-party platform 'Today’s Liquor Prices' shows that on December 14, the wholesale price of a 500ml bottle of 53-degree 2025 Feitian Maotai (loose bottles) rebounded to RMB 1,570 per bottle, with cases quoted at RMB 1,590, representing increases of RMB 85 and RMB 95 respectively compared to December 12. Citi noted that following the completion of its interim dividend payout, Kweichow Maotai had already begun implementing relevant supply control measures, which are expected to help stabilize wholesale prices and market expectations.
Of course, the reality remains challenging. In the third quarter, Kweichow Maotai's revenue and net profit attributable to shareholders grew by only 0.56% and 0.48% year-over-year, respectively, marking the lowest growth rates in nearly a decade. The deceleration in fundamental performance has been the core backdrop for the prolonged pressure on stock prices and the sector overall.
Amid performance pressures, Kweichow Maotai has opted to enhance shareholder returns through substantial cash dividends. On December 10, the company announced a cash dividend of RMB 23.957 per share, totaling RMB 30.001 billion. Combined with the RMB 34.671 billion distributed in the middle of the year, the total cash dividend for 2025 amounts to RMB 64.672 billion, with a dividend yield of approximately 3.66%, significantly higher than the yield on 10-year government bonds. Since its IPO in 2001, Kweichow Maotai has distributed dividends 29 times, totaling over RMB 366.1 billion, compared to the initial IPO proceeds of just RMB 5.934 billion.
Duan Yongping recently responded to questions about Maotai’s dividend policy, stating: “At this price level, we reinvest all our Maotai dividends directly into buying more shares.” When asked about the “clockmaker” behind Maotai's success, he praised Ji Keliang, saying: “He played a crucial role.” A sector that had been continuously overlooked by the market for three years has finally come back into focus due to the leading company’s control over supply. Whether this marks a trend reversal still requires time to confirm; however, at the very least, it appears that someone has begun to light a fire during the coldest period.
A research report from Guosheng Securities noted that leading liquor companies such as Maotai and Wuliangye have taken the initiative to respond by strengthening volume and price controls based on market supply-demand dynamics and channel health. This approach not only helps alleviate pressure on distributors and mitigate channel risks but also contributes to stabilizing market prices and boosting market confidence.
Orient Securities expects that the food and beverage sector remains under pressure regarding both volume and pricing, consistent with earlier projections. As a category primarily driven by consumer demand, the sector continues to be constrained by broader asset price trends and consumer spending intentions. Both volume and price remain relatively pressured, with high-end consumption faring better than low-end, and emerging channels continuing to outperform traditional ones.
By category, snacks and beverages are expected to maintain relatively robust growth, with ongoing category diversification. Bottled water, tea beverages, and konjac-based products continue to exhibit strong growth. Dairy products and beer are anticipated to show clear structural growth, with second-tier brands in localized markets gaining market share. Structural growth persists, with low-temperature dairy products continuing to outperform ambient ones, and mid-tier priced beers outpacing mass-market options. Overall demand in the catering supply chain continues to decline, but significant structural differentiation is evident. Condiments, frozen foods, and baked goods show spot opportunities, with incremental demand for health-oriented C-end products and customized B-end solutions. From a competitive perspective, leading firms are expected to strengthen their advantages further, with brands like Shanxi Xinghuacun Fen Wine, Yanzijiu, Dongpeng Beverages, and Nongfu Spring continuing to gain market share.
In the medium term, new consumption remains the main theme, with new categories and channels continuing to drive the narrative. We observe that categories such as health supplements, pet food, and entertainment-focused products remain in a phase of expanding demand. The instant retail channel continues to grow rapidly, while discount formats, luxury retail, and content-driven e-commerce experience slower but still faster growth compared to traditional supermarkets.
The sector has reached a favorable entry point—valuation first, followed by earnings. Despite recent adjustments in the food and beverage sector, consistent with prior views, new consumption still enjoys fundamental support in the short term, offering absolute return potential for stock prices. Meanwhile, market expectations for consumption remain relatively low, with notable characteristics of low positioning and subdued earnings forecasts, providing attractive odds. Under subsequent domestic demand policy catalysts, the traditional food and beverage sector is poised for valuation-driven gains. Furthermore, we maintain our previous stance that baijiu may reach an earnings trough on a quarter-over-quarter basis by Q1 2026. By 2026, the sector’s earnings risks are expected to dissipate, transitioning from valuation-driven to earnings-driven growth.
