China consumer staples improved sequentially in June, but overall demand remains soft

Overview

This report summarizes Goldman Sachs' June channel check and APAC Consumer & Leisure Corporate Day for China's consumer staples sector. It covers beer, beverages, dairy, snacks, condiments and prepared foods, frozen foods, and food and beverage discount retail. The core conclusion is that June improved sequentially from May, but overall consumption remained soft, with some improvement driven by a low base, the Dragon Boat Festival calendar shift, healthier channel inventories, and easing costs in some areas.

Core views

The report finds significant divergence within the sector. Discount retail and some food brands were highlights, with Wanchen, Busy Ming, and others continuing to open stores rapidly while same-store sales remained relatively healthy. Dairy demand gradually recovered, with Mengniu and Yili recording low-single-digit positive growth in liquid milk sales in June. Chacha recovered amid easing competition and favorable costs, with its rating upgraded from Sell to Buy. By contrast, beer and beverages remained affected by unfavorable weather, weak traffic, and destocking, leading to downward revisions or recalibration of near-term expectations for some companies including Bud China, Chongqing, CR Beverage, Eastroc, and Weilong.

Analysis framework

The analysis is based on channel checks, management feedback from the Corporate Day, monthly sales and store tracking, cost observations, valuation comparisons, and companies' dividend/share repurchase plans. The report compares June performance with May and the low base in the same period of 2025, and breaks down sales, shipments, store expansion, costs, expenses, and pricing trends by subsector.

Methodology notes

• Channel researchJun Check-in

  Monthly channel check

  Uses channel feedback to compare June and May sales, shipments, inventories, and same-store trends in order to assess near-term sector momentum.

• Company researchCorporate Day Takeaways

  Corporate Day management feedback

  Summarizes demand, costs, pricing, expenses, channels, and shareholder return views disclosed by more than 15 consumer staples companies during the Corporate Day.

• Monthly trackingMonthly Tracker

  Monthly subsector data tracking

  Tracks indicators including beer, beverages, dairy, snacks, condiments and prepared foods, discount retail stores, and per-store GMV.

• Valuation frameworkValuation Comps

  Comparable company valuation comparison

  Uses valuation tables for covered companies to assess market pricing, performance, and relative attractiveness across consumer companies.

• Risk-reward frameworkGS Factor Profile

  Goldman Sachs factor profile

  Goldman Sachs compares stock characteristics across dimensions including growth, financial returns, valuation multiples, and composite percentile rankings, although in this report the framework is mainly used for disclosure purposes.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Busy Ming / Wanchen

  Core beneficiaries of the food and beverage discount retail channel

  Strengths

  Rapid store openings, substantial long-term penetration upside, and significant room for category expansion.

  Weaknesses

  Per-store GMV and SSSG are affected by weather, traffic, and a high base.

  Comparison

  Discount retail remains the fastest-growing channel relative to traditional food and beverage channels.

  Risks

  Rapid store openings could reduce per-store efficiency, intensify competition, or create supply-chain execution pressure.

• Mengniu

  Beneficiary of recovering dairy demand

  Strengths

  Low-single-digit growth in liquid milk sales, relatively resilient core net profit performance, and a commitment to steady DPS growth.

  Weaknesses

  Overall consumer demand remains mild, and improvement in industry supply and demand will take time.

  Comparison

  Dairy is more resilient than beer and beverages.

  Risks

  Raw milk supply and demand, promotional intensity, and a weaker-than-expected consumer recovery.

• CR Beer

  Relatively resilient beer-sector stock

  Strengths

  More stable June performance than peers, maintained beer business outlook, and a commitment to steady year-over-year DPS growth.

  Weaknesses

  Beer remains affected by weather, foodservice traffic, and costs.

  Comparison

  CR Beer has been more resilient than Budweiser and Chongqing.

  Risks

  Unfavorable peak-season weather, logistics and aluminum cost inflation, and weak foodservice recovery.

• Chacha

  Snack-sector stock with an upgraded rating

  Strengths

  Accelerating June growth, with easing competition and lower costs improving pricing and earnings prospects.

  Weaknesses

  Overall snack-sector trends remain soft.

  Comparison

  The report describes Chacha as a relative outperformer among snack brands.

  Risks

  Renewed competitive intensity, a rebound in raw material prices, or weaker-than-expected channel cooperation.

• Yihai

  Execution- and dividend-supported stock in condiments and prepared foods

  Strengths

  Third-party sales maintained high-single-digit to approximately 10% growth, price increases in 2H25 supported gross margins, and the company maintained its high-payout commitment.

  Weaknesses

  Weak consumer sentiment limits broad-based price increases.

  Comparison

  Growth is steadier and shareholder returns are clearer than for some condiment companies.

  Risks

  Channel competition, weak demand, and slower-than-expected absorption of price increases.

• Eastroc / CR Beverage / Bud China / Chongqing / Weilong

  Stocks under short-term pressure or subject to expectation recalibration

  Strengths

  Some companies have strong brand and channel foundations, while easing cost pressures may provide a profit buffer.

  Weaknesses

  Weather, destocking, weak traffic, or consumer sentiment are weighing on short-term performance.

  Comparison

  Near-term revenue momentum is less stable than in discount retail and dairy.

  Risks

  Peak-season demand falling short of expectations, higher expense investment, and intensifying price competition.

Key data

• Number of companies covered at the Corporate Day15+Goldman Sachs said it hosted more than 15 staples companies last week.
• June sector trendImproved sequentially from May but remained softMost companies reported improvement in June versus May, driven by a low base, the Dragon Boat Festival timing shift, and healthy channel inventories.
• Discount retail store-opening paceLeading brands added approximately 1,000 to more than 1,500 stores per month in May and JuneThe report said discount retail continued to expand rapidly, but per-store GMV/SSSG was affected by weather.
• Wanchen 1H26 store openingsAt least 4.7k gross openings, with approximately 4.1k net additionsThe report believes Wanchen's store openings were faster than expected and SSSG was relatively resilient.
• Busy Ming store countApproximately 26.976k stores in May 2026; the June table shows approximately 1.014k net additionsThe table carries a risk of formatting misalignment from OCR, but the main text confirms a steady store-opening pace and positive SSSG.
• PET pricesFell from approximately Rmb9.6k/t in early May to approximately Rmb7.2k/t recentlyEasing cost pressures should benefit margins for beverage and some food companies in 2H26.
• Dairy demandMengniu and Yili recorded low-single-digit positive growth in liquid milk sales in JuneDemand continued to recover gradually, potentially helped by the Dragon Boat Festival calendar shift.
• Nongfu salesOverall low-double-digit growth in May and June; Oriental Leaf grew approximately 40% year over yearThe water business may have declined in May and June, while unsweetened tea remained strong.
• Tsingtao beer volumeApproximately flat year over year in JuneThis improved from the high-single-digit declines in April and May.
• Chacha rating changeUpgraded from Sell to BuyThe rationale was recovering pricing power amid easing competition, alongside favorable cost trends.

Impact & implications

For portfolios, the report favors individual stocks with channel expansion, easing costs, strong execution, and dividend support rather than simply betting on an overall consumption recovery. Discount retail, some dairy companies, and snack companies with new-product or channel advantages may prove more resilient. Beer and beverages may still be affected by weather, traffic, and competitive spending during the peak season, and near-term earnings elasticity requires further validation.

Risks

• Persistently weak consumer sentiment could cause volume recovery to lag expectations.
• Adverse weather could continue to weigh on beverages, beer, and travel-related consumption.
• Per-store GMV or SSSG could decline following rapid discount retail expansion.
• Limited pricing power among food and beverage brands could lead to higher promotions and expense ratios amid competition.
• Renewed increases in logistics, aluminum, PET, edible oil, sunflower seed, konjac, and other raw material prices.
• Channel destocking or inventory normalization could weigh on short-term shipments.
• Shareholder return plans falling short of expectations or earnings pressure weakening dividend capacity.

What to watch

• Peak-season weather and traffic recovery in July and 3Q26.
• Whether the low base in foodservice and retail from July to September 2025 translates into actual growth.
• Trends in PET, edible oil, sunflower seed, konjac, aluminum, and other costs.
• Whether discount retail store expansion, per-store GMV, and SSSG remain stable in 3Q.
• Expense investment, freezer placement, O2O penetration, and promotional intensity at beer and beverage companies.
• Whether food and beverage brands can improve their product mix through high-margin new products rather than relying on broad-based price increases.
• Dividend or repurchase execution by Yihai, Tingyi, CR Beer, Mengniu, CR Beverage, Eastroc, Weilong, and other companies.