China consumer staples input-cost trends Report Interpretation

Overview

This is Goldman Sachs' July 2026 tracker of China consumer-staples raw-material costs and their likely implications for sector cost indexes and gross margins. It finds broadly lower sequential costs for several categories, but with divergent commodity movements and continuing year-on-year pressure in PET and other packaging inputs.

Core views

PET prices edged higher toward Rmb7.6k-Rmb7.8k/ton in late July and early August, after averaging Rmb7,564/ton in July. The August 4 spot price was Rmb7,815/ton, up about 27% year to date and 28% year on year, while the July average fell 6% month on month. This lower monthly average moderated packaging-cost pressure: PET, pulp and aluminum were respectively up 22%, 21% and 12% year on year, but changed -6%, +3% and -3% month on month. The report therefore treats packaging as a source of sequential relief in July despite still-elevated annual comparisons. Other inputs moved unevenly. Molasses fell 5.6% month on month and its spot price implied a 31% year-on-year decline. Palm oil fell 1% month on month but was up 4% year on year, while pepper fell 9% month on month and 5% year on year. In contrast, soybean prices rose 6% month on month and bean pulp 7.6%; they were up 12% and 2% year on year, respectively. Protein prices diverged: fish, chicken, pork, beef, shrimp and duck changed -0.3%, -8.7%, +7%, 0%, 0% and +4.7% month on month, with pork still 24% lower year on year despite its monthly increase. Barley import prices rose 3.6% month on month and 5% year on year in June, whereas the report notes that CRB, Chongqing Brewery and Tsingtao Brewery had locked in 2026 barley costs at a mid-single- to high-single-digit year-on-year decline at end-2025; Bud APAC uses a 12-month rolling forward-cost hedge. The resulting July sector-cost readings favor beverages, frozen bakery and pet food. The beverage index fell 2.8% month on month, led by lower PET, sugar, milk powder, palm oil and aluminum, partly offset by paper pulp and cocoa. Frozen bakery fell 2.3% on lower milk powder, sugar and palm oil, and the pet-food index fell 1.8% as chicken, PET and starch declined. Frozen flour and rice was the exception among the highlighted sectors: Sanquan's index rose 1.4% month on month, mainly because pork increased. The report also ranks average pure cost benefits as Frozen Food, Compound Condiments, Pet Food, Soy Sauce, Beer, then F&B and Snacks; its estimated average gross-margin expansion ranking is Soy Sauce, Frozen Food, F&B and Snacks, Beer, Compound Condiments, then Pet Food. Company cost-exposure tables show why raw-material moves do not translate uniformly into margins. For soy sauce, Goldman Sachs estimates raw-material contributions to 2026 unit COGS of 2.9% for Haitian and 3.9% for Jonjee, with estimated 2026 gross-margin changes of +0.3% and +1.8%. For beer, estimated gross-margin changes are -0.6% for Bud APAC, 0.0% for Tsingtao Brewery, +0.6% for CR Beer and +0.2% for Chongqing Brewery. For pet food, the corresponding estimates are -2.2% for China Pet Foods, -1.0% for Petpal and -2.4% for Gambol, even though the July pet-food cost index improved sequentially. In condiments, soybean and soybean-oil pressure was offset by sugar, PET and MSG, leaving July cost trends mixed. Dairy is a separate supply-demand theme. Raw-milk prices rose 1% year on year in July and had stabilized around Rmb3.0/kg since mid-June; the 3Q26 quarter-to-date average was up 0.2% year on year. Goldman Sachs sees early signs of domestic demand recovery and expects supply and demand to rebalance in 2H26 through continued herd downsizing, lower domestic supply, reduced net imports—especially dry milk powder imports—and modest total-demand recovery. Cow herd size had fallen 4.2% year on year in May, while imported milk-powder volume was 50 kton in June, down 8% year on year. The report also records 157 kton of imported dry dairy products in June, up 26% year on year in its exhibit. At the macro level, China's headline CPI inflation slowed to +0.5% year on year in July from +1.0% in June, mainly due to lower oil-related products and tourism services. Food CPI was -1.5% year on year versus -1.6% in June; pork was -13.3% year on year, fresh vegetables -0.3%, and fresh fruit -1.1%. These consumer-price readings provide context for the report's cost and pricing tracker rather than a report-wide earnings or valuation conclusion.

Analysis framework

Goldman Sachs tracks monthly spot and import prices for agricultural, protein, dairy and packaging inputs, then maps those moves to sector and company cost indexes using disclosed raw-material shares of COGS. It compares cost-index changes with gross-margin and sales trends, incorporates company procurement or hedging policies where disclosed, and separately assesses dairy using supply, imports and demand indicators.

Methodology notes

• Industry AnalysisSupply-demand framework

  Raw-milk supply-demand assessment

  The report links herd-size cuts, lower imports and recovering demand to its expectation that China's dairy market will rebalance in 2H26.

• Industry AnalysisVolume-price decomposition

  Input-price and COGS-exposure analysis

  The tracker combines commodity price changes with each sector's or company's raw-material cost mix to estimate unit-COGS and gross-margin effects.

Asset mapping & comparison

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

• Haitian

  Soy-sauce company assessed for raw-material cost and gross-margin effects.

  Strengths

  Goldman Sachs estimates a +0.3% gross-margin change in 2026.

  Weaknesses

  Raw-material contribution to unit COGS is estimated at 2.9%.

  Comparison

  Estimated 2026 gross-margin change is below Jonjee's +1.8%.

  Risks

  Soybean, sugar, glass, PET and MSG cost movements affect the outcome.

• Jonjee

  Soy-sauce company assessed for raw-material cost and gross-margin effects.

  Strengths

  Goldman Sachs estimates a +1.8% gross-margin change in 2026.

  Weaknesses

  Raw-material contribution to unit COGS is estimated at 3.9%.

  Comparison

  Estimated 2026 gross-margin change exceeds Haitian's +0.3%.

  Risks

  Soybean, sugar, glass, PET and MSG cost movements affect the outcome.

• CR Beer

  Beer company assessed for input-cost and gross-margin effects.

  Strengths

  Goldman Sachs estimates a +0.6% gross-margin change in 2026; barley lock-in cost is likely down year on year.

  Weaknesses

  Raw-material contribution to unit COGS is estimated at 3.9%.

  Comparison

  Estimated margin change is higher than Bud APAC and Tsingtao Brewery in the table.

  Risks

  Aluminum, pulp, glass, barley and rice costs remain relevant.

• Sanquan

  Frozen-food company used to illustrate July cost inflation.

  Weaknesses

  Its frozen flour and rice cost index increased 1.4% month on month, mainly on higher pork.

  Comparison

  It was the highlighted exception as most frozen-food costs trended lower.

  Risks

  Pork-price increases can offset relief from chicken, starch and sugar.

• China Pet Foods

  Pet-food company assessed for raw-material cost and gross-margin effects.

  Strengths

  July sector costs benefited from lower chicken, PET and starch.

  Weaknesses

  Goldman Sachs estimates a -2.2% gross-margin change in 2026.

  Comparison

  The estimate is less favorable than Petpal's -1.0% but better than Gambol's -2.4%.

  Risks

  Rawhide, chicken, duck, starch, corn, oil and PET costs affect results.

Key data

• PET average priceRmb7,564/ton in July 2026Down 6% month on month; PET spot price was Rmb7,815/ton on August 4, up about 28% year on year.
• Beverage cost index-2.8% MoMLower PET, sugar, milk powder, palm oil and aluminum more than offset higher pulp and cocoa.
• Frozen bakery cost index-2.3% MoMDriven by lower milk powder, sugar and palm oil.
• Pet-food cost index-1.8% MoMLower chicken, PET and starch prices.
• Sanquan frozen flour and rice cost index+1.4% MoMMainly due to higher pork prices.
• Raw milkAround Rmb3.0/kgStabilized since mid-June; July price up 1% YoY and 3Q26 QTD average up 0.2% YoY.
• Cow herd size-4.2% YoY in May 2026Part of the evidence for lower domestic dairy supply.
• Imported milk powder50 kton in June 2026Down 8% YoY.
• China headline CPI+0.5% YoY in JulyDown from +1.0% YoY in June.

Impact & implications

The report indicates that July's sequential input-cost relief was most favorable for beverages, frozen bakery and pet food, while company-level margin outcomes remain dependent on each business's cost mix, procurement policy and exposure to commodities such as pork, soybean products, PET and pulp. It identifies a prospective tightening and rebalancing of the domestic raw-milk market in the second half of 2026.

What to watch

• Monthly PET, pulp and aluminum prices, as packaging costs remained materially higher year on year despite July sequential relief.
• Pork and soybean-product prices, which were key sources of cost pressure for frozen food and condiments.
• Domestic dairy herd reductions, milk-powder imports and demand recovery as indicators of the expected 2H26 raw-milk rebalancing.
• Whether company price actions and procurement or hedging policies translate changing input costs into gross-margin outcomes.