Staples diverged markedly in July: value retail and dairy showed resilience, while beer was hit by weather and destocking
AI summary card
Staples diverged markedly in July: value retail and dairy showed resilience, while beer was hit by weather and destocking
Goldman Sachs channel checks show that value retail, dairy, condiments and frozen foods maintained resilience in July, beverages stabilized month-on-month, while beer volumes came under further pressure due to persistent rainfall and post-World Cup channel destocking.
- Value retail remained a structural bright spot, with both Busy Ming and Wanchen Group adding more than 1,000 net new stores in July.
- Dairy demand accelerated, with Mengniu revenue growing high-single-digit to double-digit year-on-year, Yili liquid milk sales achieving low-single-digit growth, and channel inventories at healthy low levels.
- Beer was affected by adverse weather and destocking after the end of the World Cup, with Tsingtao Brewery and Budweiser APAC volumes estimated to decline by double digits year-on-year; Yanjing Beer outperformed thanks to approximately 30% growth in U8.
- The beverage segment stabilized month-on-month, with Uni-President’s beverage decline narrowing to near flat, Nongfu Spring bottled water accelerating in July after destocking in May to June, and sugar-free tea maintaining double-digit growth.
- Condiments, frozen foods and snacks strengthened in selected areas, with Haitian Flavouring growth improving, Anjoy Foods achieving low-double-digit growth, and Chacha Food’s growth rising to double digits.
Report interpretation
Overview
The report provides a monthly tracker of China’s food & beverage and staples industry based on July channel checks, store opening data, industry output and price data, and valuation comparisons of covered companies. The industry overall showed a high degree of divergence: most categories were stable or improved as base effects eased, value retail continued to expand rapidly, and dairy and food demand remained resilient; beer and beverages were still affected by weather, but beverages showed month-on-month stabilization, while beer weakened further due to additional post-World Cup destocking.
Core views
Structural opportunities are concentrated in value retail, dairy and food companies with strong execution. Value retail still has significant room for long-term penetration and category expansion, but investors need to monitor the dilution of same-store sales from rapid store openings. Dairy demand is recovering, channel inventories are healthy, and the raw milk supply-demand balance is improving. Beverage promotions, new product distribution and a low base are expected to drive subsequent improvement. Baijiu destocking during the off-season should help restore channel health ahead of the Mid-Autumn Festival peak season, with wholesale prices of Feitian Moutai remaining stable after a price increase in mid-July. Beer still faces near-term pressure from weather, inventory and volumes, but China Resources Beer’s Heineken products and Yanjing Beer’s U8 performed relatively better.
Analysis framework
The report combines monthly channel checks with company data, public social media and geospatial store data, compares year-on-year growth, month-on-month changes, channel inventories, store expansion, same-store sales and promotional spending across categories, and uses valuation tables for covered companies to assess ratings, target prices, earnings growth, valuations and dividend yields.
Methodology notes
Track changes in sales volumes, inventories and promotions through feedback from distributors, terminals and companies
Focus on comparing July trends versus June and the first half, identifying the impact of weather, base effects, destocking and new product distribution on each category.
Assess the quality of value retail expansion by combining net store additions, regional layout and same-store gross merchandise value
Data sources include Douyin, WeChat official accounts, GeoQ, company data and Goldman Sachs estimates; actual store counts may have timing lags.
Track raw milk output, dairy cow inventory, raw milk prices and downstream dairy product output
Used to judge the impact of upstream supply contraction, stabilization of raw milk prices and recovery in downstream production on dairy companies’ revenue and profitability.
Compare ratings, current prices, 12-month target prices, P/E ratios, enterprise value multiples, revenue and net profit growth, ROE and dividend yields
Valuation data are as of August 6, 2026, and are used to measure the fit between growth, returns and valuations across different subsectors and stocks.
Compare stocks across growth, financial returns, valuation multiples and composite dimensions
Growth is based on forward revenue, EBITDA and EPS; financial returns are based on metrics such as ROE; composite percentiles consider growth, returns and valuation simultaneously.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Busy Ming Group（1768.HK）Core Buy target in value retail
- Strengths
- Rapid store expansion, with significant long-term room for penetration and category expansion; 12-month target price of HK$581.00, implying 56% potential return.
- Weaknesses
- High-speed store openings may dilute same-store gross merchandise value, and expansion quality still requires continuous validation.
- Comparison
- Together with Wanchen Group, it is one of the report’s most prominent structural growth directions; regional expansion paths differ but the competitive landscape is generally healthy.
- Risks
- Decline in same-store sales, slower-than-expected store maturation, rising competition and expense investment.
- 万辰集团（300972.SZ）Core Buy target in value retail
- Strengths
- Continued rapid store openings, with a target price of RMB324.00, implying 60% potential return, among the higher levels in coverage.
- Weaknesses
- The rapid pace of store expansion places higher requirements on organization, supply chain and same-store operations.
- Comparison
- Benefits together with Busy Ming Group from penetration of discount snack retail channels, though regional layout and store-opening strategies differ.
- Risks
- Pressure on same-store sales, expansion dilution, intensified regional competition and execution deviation.
- 伊利股份（600887.SS）Beneficiary of dairy demand recovery
- Strengths
- Liquid milk sales accelerated month-on-month and distributor inventories are healthy; Buy rating, target price RMB37.00, implying 41% potential return.
- Weaknesses
- Industry demand recovery remains moderate, and positive year-on-year raw milk prices may weaken the cost tailwind.
- Comparison
- Compared with Mengniu, July growth was lower, but operating stability and target return are higher.
- Risks
- End demand below expectations, promotional competition, rising raw milk costs.
- 蒙牛乳业（2319.HK）Beneficiary of dairy demand recovery
- Strengths
- Achieved high-single-digit to double-digit growth on a low base, with channel inventories near historical lows; Buy rating, target price HK$24.00.
- Weaknesses
- Growth was partly driven by a low base, and sustainability still needs to be verified in subsequent months.
- Comparison
- July growth was faster than Yili’s, but potential return to target price is 26%, lower than Yili’s 41%.
- Risks
- Slower demand recovery, price competition, insufficient returns on channel investment.
- 农夫山泉（9633.HK）Beneficiary of month-on-month beverage improvement
- Strengths
- Bottled water accelerated in July after earlier destocking, sugar-free tea maintained double-digit growth, and beverage segment growth exceeded the low-teens percentage range; target price HK$59.90, implying 41% potential return.
- Weaknesses
- Overall bottled water industry growth remains slow, and the business is relatively sensitive to weather.
- Comparison
- Compared with low-base recoveries at Uni-President and Tingyi, Nongfu Spring is more strongly supported by high growth in sugar-free tea.
- Risks
- Adverse weather, industry price competition, slower new product growth and channel inventory volatility.
- 华润啤酒（0291.HK）Relatively defensive Buy target in the beer segment
- Strengths
- Despite industry destocking, volume performance was relatively more resilient, and Heineken products remained steady; target price HK$35.15, implying 59% potential return.
- Weaknesses
- Still cannot fully avoid industry volume and weather pressure.
- Comparison
- July performance was better than Tsingtao Brewery and Budweiser APAC, but Yanjing Beer stood out more thanks to U8 growth.
- Risks
- Persistent rainfall, weak peak-season demand, prolonged channel destocking and slower premiumization.
- 洽洽食品（002557.SZ）Buy target with improving snack food operations
- Strengths
- July year-on-year growth accelerated from high-single-digit in June to double digits, reflecting an operational inflection point; target price RMB22.50.
- Weaknesses
- Potential return to target price is 15%, lower than value retail and some beverage and dairy names.
- Comparison
- Performance leads among branded snack companies, with the most obvious improvement in growth.
- Risks
- Unsustainable demand improvement, channel competition, raw material costs and weaker-than-expected new product performance.
- 贵州茅台（600519.SS）Constructive allocation target in the baijiu segment
- Strengths
- Feitian Moutai wholesale prices remained stable after a mid-July price increase; if supply is controlled in the second half, channel expectations may improve; target price RMB1,667.00, implying 27% potential return.
- Weaknesses
- The baijiu industry is still in off-season destocking, with weak near-term demand and channel confidence.
- Comparison
- Within baijiu, the report focuses more on Kweichow Moutai’s wholesale prices and supply control, with its channel resilience stronger than most sub-premium baijiu companies.
- Risks
- Decline in wholesale prices, weaker-than-expected peak-season demand, slow channel inventory digestion and policy impact.
Key data
- Busy Ming store count in July 202628,210 storesNet additions of 1,234 stores during the month, continuing rapid expansion.
- Monthly net new stores in value retailBoth Busy Ming and Wanchen Group exceeded 1,000 storesThe report expects July same-store sales to be broadly stable, supported by a low base and summer demand.
- Yanjing Beer U8 growthApproximately 30% year-on-year growthFurther accelerated from growth of around more than 28% in the first half of 2026.
- Mengniu Dairy July growthHigh-single-digit to double-digit year-on-year growthSupported by a low base and healthy channel inventories.
- Yili liquid milk sales growthLow-single-digit year-on-year growthAccelerated month-on-month compared with previous months.
- Haitian Flavouring July growthMid-single-digit to high-single-digit year-on-year growthPerformance improved and channel inventories remained stable.
- Anjoy Foods July growthLow-double-digit year-on-year growthSupported by a lower comparison base.
- China raw milk outputYear-on-year growth of 1.5% in the second quarter of 2026Dairy cow inventory fell 4.2% year-on-year in May 2026.
- China dairy product outputYear-on-year growth of 4.5% in June 2026 and 6% growth in the second quarterIndicates continued recovery in downstream dairy production.
- Raw milk priceStable at around RMB3.0/kg since mid-June 2026Average raw milk prices in the third quarter of 2026 through the reporting period turned positive year-on-year.
- Wanchen Group target return60%Buy rating, current price RMB202.66, 12-month target price RMB324.00.
- Busy Ming Group target return56%Buy rating, current price HK$371.80, 12-month target price HK$581.00.
Impact & implications
From an allocation perspective, investors should continue to favor companies with store expansion, share gains, healthy inventories or operational inflection points, while reducing exposure to categories that are sensitive to near-term weather and still in a destocking phase. Value retail has the highest structural growth visibility, but same-store sales stability will determine whether valuations can be sustained; dairy is supported by demand recovery and channel improvement; beverages are expected to benefit from a low base, promotions and easing raw material costs; beer faces higher near-term volume risk. Although active channel destocking in baijiu suppresses current sales, it may establish a healthier inventory base for the Mid-Autumn Festival and National Day peak seasons.
Risks
- Persistent heavy rainfall or abnormal weather may further suppress peak-season demand for beer, energy drinks and bottled water.
- Beer and baijiu channel destocking may last longer than expected, putting pressure on shipments, prices and profitability.
- Rapid store openings in value retail may dilute same-store sales, with new store maturity and supply-chain efficiency falling short of expectations.
- Escalation of QR-code direct-to-consumer promotions, freezer placements and other expense competition in the beverage industry may erode margins.
- Rising prices of raw milk and other key raw materials may weaken room for cost improvement at dairy and beverage companies.
- A lack of significant new consumption stimulus policies in the second half may lead to weaker-than-expected macro consumption recovery.
- Store data used in the report may have timing lags versus actual company disclosures.
What to watch
- Feitian Moutai wholesale prices, supply pace and baijiu channel inventory changes ahead of the Mid-Autumn Festival and National Day peak seasons.
- The duration of beer destocking after the end of the World Cup and the extent of volume recovery after weather improves.
- Changes in beverage companies’ QR-code promotions, freezer placements and expense ratios, and whether lower PET raw material costs can offset promotional spending.
- Busy Ming and Wanchen Group’s pace of net store openings, regional expansion and stability of same-store gross merchandise value.
- Mengniu and Yili’s end demand, distributor inventories and changes in raw milk prices.
- Nongfu Spring’s sugar-free tea, Dongpeng Beverage’s new products, and month-on-month recovery in Uni-President and Tingyi’s beverage businesses.
- Growth sustainability of Haitian Flavouring, Anjoy Foods and Chacha Food after low-base effects fade.
- Ramp-up progress of Angel Yeast’s branded snacks, yeast protein and other new products and new channels.
- The impact of consumption stimulus policies in the second half and low-base effects in catering channels on food & beverage demand.