Minsheng Securities: Real-time retail will accelerate the modernization transformation of the liquor channel. We continue to recommend Kweichow Moutai (600519.SH) and others.

Minsheng Securities released a research report stating that as a typical scenario-based consumer product, supply innovation is key for the Baijiu industry. Currently, the number of distributors and terminal stores in the Baijiu industry may continue to decrease in the future. By 2025, supply will be restrained, demand scenarios will bottom out, and channels will exhibit low profit margins and high turnover. The Chun Tang Expo will showcase new products with weakened trading functions, while trend forums and new category product displays will be strengthened, indicating that the Baijiu industry is undergoing a critical period of change. Based on the basic judgment of bottoming out demand and the low base effect during the Mid-Autumn Festival and National Day peak season of 2025, combined with current valuations, dividend yields, and capital structure, it is expected to lead the way and continue to recommend Kweichow Moutai (600519.SH) and Shanxi Xinghuacun Fen Wine Factory (600809.SH). The main points of Minsheng Securities are as follows: Chun Tang feedback Overall, firstly, there is no consumption without a scenario, Baijiu is a typical scenario-based consumer product, and there is no need to discuss the issue of youngerizing Baijiu too much, with supply innovation being put on the agenda; secondly, the importance of distributors and terminal stores in the Baijiu industry is self-evident, but their numbers may continue to be reduced in the future. Thirdly, since 2025, the industry's supply has been relatively restrained, demand scenarios have gradually bottomed out, channels maintain low margins, and pursue high turnover. The 112th Chengdu Sugar and Wine Expo held from March 25-27 will continue to weaken the functions of showcasing new products and trading, while enhancing trend forums and showcasing new category products. Observation 1 Instant retail will become an important entrance for brand diversion, potentially reducing the survival space of traditional channel distributors and terminal stores, and accelerating concentration. (1) With higher brand product maturity and regional maturity, under the environment of continuous contraction of scenario demand, the challenge for channel entities to maintain a reasonable and stable profit distribution of existing scale through measures such as controlling profits by volume, controlling profits by price, and stabilizing profits will be faced; (2) With the gradual youngerization of consumer structure, under the cultivation of convenience from local life services such as Meituan, Dingdong, and Pinduoduo supermarkets, the consumption habit of instant delivery has been established, and there is no substantial obstacle to placing orders for alcoholic beverages; (3) Instant retail solves two difficulties of traditional e-commerce, namely immediate sales and distribution, and past O2O attempts by enterprises were mostly limited by single-brand traffic; and the profit-sharing conflict between enterprise e-commerce departments and offline sales areas shifted from confrontation to empowering traffic diversion (traditional flagship stores such as JD.com and Maotoushe's online prices are much higher than offline, independent e-commerce departments often redirect sales performance). Observation 2 Brands continue to shorten the distance to consumers, C-end cost investment continues to increase, short-term profit growth may be affected, brand concentration will continue to increase, and brand remains the most important factor. Product innovation/supply innovation is the backbone of the era of brands, traditional famous liquor brands promoting upgrades of old products and covering a wide range of price points is a choice in market competition, while low alcohol content, multiple specifications, and youthful packaging are beneficial attempts at innovation in new liquor consumption. Consumer demand has bottomed out in an "L-shaped" manner, structural upgrades are the main support logic, and the recovery slope depends on the activity level of economic activities. (1) Since 2022, the demand scenarios for government-business affairs have continued to shrink, while the stable mass consumption and necessary gift consumption scenarios on the residential side, with expectations for the restoration of banquet and gift scenarios during 2025, high-frequency data tracking such as air travel, hotel, and wholesale pricing for alcoholic beverages, and offline sampling terminal group buying data are used to verify business activity; (2) The impact of population factors and industrial structure adjustment and upgrading trends on demand quantity still lack sufficient evidence. Risk warning: Slowdown in economic recovery slope and ineffective stimulus policies for consumption; intensified industry competition; slower-than-expected progress in company reforms; food safety issues; underperformance of instant retail development and other factors.