Goldman Sachs: 1Q26 start improves in consumer sector, with stock selection refocusing on domestic demand and pricing stability
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Goldman Sachs: 1Q26 start improves in consumer sector, with stock selection refocusing on domestic demand and pricing stability
The report believes Chinese consumer companies delivered weak 2H25/4Q25 results, but demand improved across most sectors in 1Q26, making restaurants, prepared foods, sportswear, seasonings, and food & beverage discount retail more preferred areas.
- Domestic demand remained weak in 4Q25, but trends in most consumer subsectors were healthier in 1Q26, with Lunar New Year spending helping restaurants, sportswear, and some staples improve.
- Several sectors showed signs of more stable pricing. Restaurants, frozen foods, seasonings, cosmetics, sportswear, and some home appliance companies eased pressure through more disciplined promotions, product mix upgrades, or price increases.
- Cost inflation and operational disruptions from geopolitical conflicts are the key risks, and sharp year-on-year increases in aluminum, copper, PET, and other raw materials are particularly unfavorable for beverages, pet food, apparel/footwear, and plastic toys.
- Investor preference is shifting away from overseas growth stories toward domestic-demand names, as overseas demand becomes more volatile, competition intensifies, the renminbi strengthens, tariffs rise, and geopolitical risks increase.
- Goldman Sachs continues to favor restaurants and prepared foods, and has added preference for sportswear brands, seasonings, and food & beverage discount retail; it is more cautious on beverages, pet food, and apparel/footwear OEM.
Report interpretation
Overview
This is Goldman Sachs' summary of the 2H25/4Q25 earnings season for China's consumer sector. The report notes that domestic consumption demand in 4Q25 remained generally weak, extending the consumer confidence shortage and rational spending patterns seen since 3Q25, while also being affected by weather and the timing shift of the Lunar New Year. However, entering 1Q26, domestic consumption trends in most sectors were clearly better than in 4Q25, with restaurants, sportswear, seasonings, dairy, home appliances, IP retail, and some staples all showing improvement or resilience. The report also emphasizes that cost inflation, operational disruptions caused by geopolitical conflicts, uncertainty in overseas demand, and rising channel acquisition costs are the main variables affecting 2026 earnings and valuations.
Core views
The core views are: first, domestic demand improved in 1Q26 versus 4Q25, but post-holiday sustainability still needs to be observed; second, pricing competition in several consumer subsectors has started to become more rational, with signs of a floor in pricing or discounting; third, higher raw-material prices and supply-chain disruptions are creating uneven pressure on earnings, and leaders with procurement, pricing, and product-mix capabilities have an advantage; fourth, overseas growth still has long-term opportunity, but short-term risks have risen, and the market is shifting preference toward domestic-demand names; fifth, some multinational brands have regained momentum through brand strength, product mix, and localization strategies; sixth, offline experience and online ROI management have become the focus of channel strategy.
Analysis framework
The report is based on Goldman Sachs-covered Chinese consumer companies' 2H25/4Q25 results releases, 1Q26 operating trends, industry tracking data, management discussions, macro consumption forecasts, raw-material price changes, and observations of channel and brand competition, and it compares different subsectors horizontally while updating sector preferences and the key stock list.
Methodology notes
Compares consumer subsectors using demand trends, pricing stability, cost pressure, competitive landscape, overseas risk, and earnings visibility.
The report lists restaurants, prepared foods, sportswear brands, seasonings, and food & beverage discount retail as relatively preferred directions, and lowers its preference for beverages, pet food, and apparel/footwear OEM.
Tracks changes in residents' consumption capacity and discretionary spending cash flow.
The report cites Goldman Sachs' China household discretionary consumption cash flow model and notes that the macro team expects 2026 household real consumption growth to slow from 4.8% in 2025 to 4.5%, while CPI rises from 0% to 1%.
Compares stocks across growth, financial returns, valuation multiples, and composite metrics.
This framework uses Goldman Sachs forecast data to standardize rankings of sales, EBITDA, EPS, ROE, ROCE, CROCI, P/E, P/B, dividend yield, and EV-based metrics to provide stock-investment context.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Restaurantscontinue to favor
- Strengths
- Improving demand, stable pricing competition, and support from Lunar New Year spending and policies supporting service consumption.
- Weaknesses
- A higher share of delivery sales may create pressure from labor and platform costs.
- Comparison
- More attractive than furniture, projectors, small kitchen appliances, and non-premium baijiu in terms of demand and earnings visibility.
- Risks
- Post-holiday spending sustainability, changes in delivery subsidies, and a high same-store-sales base.
- Prepared foodscontinue to favor
- Strengths
- Recovery in restaurant demand and easing competition should help pricing trends improve.
- Weaknesses
- The company still needs to balance value-for-money with quality positioning.
- Comparison
- Companies such as Anjoy Foods are showing more rational competition by reducing promotions and selectively raising prices.
- Risks
- Raw-material costs, channel demand volatility, and renewed competitive intensity.
- Sportswear brandsnew preference
- Strengths
- Demand is healthy, discounting is expected to improve, and some brands are strengthening online promotion management and narrowing online-offline price gaps.
- Weaknesses
- Discounts still widened year on year in 1Q26, and the warm winter plus commoditized competition created pressure.
- Comparison
- Multinational brands such as adidas are performing better than some local brands, while Nike is under pressure from its product cycle and weaker localization.
- Risks
- Weak post-holiday demand, inventory and discount pressure, and competition from international brands.
- Seasoningsnew preference
- Strengths
- Demand from restaurant channels is recovering, leaders are gaining share, and price increases at some companies are showing initial effectiveness.
- Weaknesses
- 2026 is not a broad-based pricing-up cycle, and some companies will rely more on scale, mix, and efficiency to absorb costs.
- Comparison
- Haitian is viewed as having outperformed in 4Q25 and having relatively high sales-growth visibility in 2026.
- Risks
- Cost pressure, acceptance of price increases, and a weaker-than-expected restaurant recovery.
- Food & beverage discount retailnew preference
- Strengths
- Value retail remains a bright spot, with relatively clear 2026 growth visibility.
- Weaknesses
- It may raise concerns about brand profit shifting toward retail channels.
- Comparison
- Compared with traditional offline channels, it benefits more from rational consumption and value-for-money demand.
- Risks
- Channel competition, changes in profit allocation, and slowing same-store growth.
- Beveragesmore cautious
- Strengths
- Some leaders, such as Nongfu Spring, delivered strong 2H25 results.
- Weaknesses
- Prices of PET and other packaging materials rose sharply, increasing cost-inflation risk.
- Comparison
- Faces more direct input-cost pressure than restaurants, prepared foods, and seasonings.
- Risks
- Raw-material inflation, difficulty raising prices, and demand elasticity.
- Pet foodmore cautious
- Strengths
- The strategy of expanding own brands globally is still being advanced, and some companies are seeing more stable overseas orders or restocking.
- Weaknesses
- Overseas trends are unstable, and orders at some companies remain weak.
- Comparison
- Domestic brands continue to gain share in pet food coverage, while global brands are relatively weaker.
- Risks
- Overseas demand volatility, rising costs, competition, and channel changes.
- Apparel/footwear OEMmore cautious
- Strengths
- There is still hope for some recovery in orders and margins in 2026, and World Cup-themed orders could support 1H26.
- Weaknesses
- Brands are cautious in placing orders, Nike's recovery is slow, and input costs and geopolitical risks are rising.
- Comparison
- Compared with domestic-demand-driven sectors, it is more exposed to overseas orders and supply-chain risk.
- Risks
- Demand uncertainty, raw-material inflation, production disruptions in Southeast Asia, and lower visibility on customer orders.
- Jewelry and golddifferentiated view
- Strengths
- Up-cycle brands such as Laopu Gold achieved strong, better-than-expected growth despite gold-price volatility.
- Weaknesses
- Gold-price volatility makes the overall jewelry demand outlook more uncertain.
- Comparison
- Companies with strong brand cycles outperform general gold jewelry retailers.
- Risks
- Large swings in gold prices, consumers delaying purchases, and changes in the pace of price increases.
Key data
- Report date2026-04-13The cover shows Equity Research 13 April 2026.
- 2026E real household consumption growth4.5%Goldman Sachs' macro team expects this to be below 2025's 4.8%.
- 2026E CPI1%Expected to rise from 0% in 2025.
- 2026 consumer goods trade-in subsidyRmb 250 bnLower than Rmb 300 bn in 2025, but broadly in line with investors' low expectations.
- YoY change in aluminum pricesabout +20% yoyAs of late March 2026, rising non-ferrous metal costs were an important source of cost pressure.
- YoY change in copper pricesabout +24% yoyThis creates cost pressure for home appliances and parts of the manufacturing chain.
- YoY change in PET pricesabout +50% yoySharp increases since March are unfavorable for packaging-related industries such as beverages.
- adidas 4Q25 sales growth+15% yoyDriven by product popularity and consumer engagement initiatives, it became a share gainer among sports brands.
Impact & implications
The investment implication is that the consumer sector should not be traded simply as a broad-based recovery; instead, greater emphasis should be placed on differentiation across subsectors and companies. Improving domestic demand, easing price competition, better channel ROI, product upgrades, and share gains by leading companies are favorable for restaurants, prepared foods, sportswear, seasonings, and value retail, while subsectors with high cost-inflation exposure, large overseas-demand volatility, low brand-order visibility, or ongoing destocking may face limited earnings leverage and valuation recovery.
Risks
- Consumer trends may soften after the Lunar New Year, and the sustainability of the 1Q26 improvement still needs to be verified.
- Further rises in raw-material costs could compress gross margins, especially in beverages, pet food, apparel/footwear, and plastic toys.
- Geopolitical conflicts may lead to weaker overseas demand, delayed orders, and supply-chain and production disruptions.
- Overseas businesses face short-term risks from demand volatility, intensifying competition, renminbi appreciation, tariffs, and rising costs.
- Online customer acquisition costs and discount competition may erode profits, requiring brands to rebalance growth and ROI.
- The long-term effect of policy support for consumption still depends on structural reform, and near-term subsidy力度 may be lower than some market expectations.
What to watch
- The sustainability of consumption after the Lunar New Year and around the Qingming holiday, especially trends after March in restaurants, sportswear, and staples.
- The normalization of delivery-platform subsidies and the impact of regulatory efforts to promote rational competition on same-store sales, traffic, and store margins.
- The trend in prices of major raw materials such as aluminum, copper, and PET, and companies' ability to offset cost pressure through price increases, procurement, hedging, product mix, and efficiency improvements.
- Whether further support policies for service consumption are rolled out, and the actual stimulus in key areas such as transportation, travel and lodging, housekeeping, online entertainment, and inbound tourism consumption.
- Share changes between multinational and local brands in cosmetics, sportswear, and pet food.
- The impact of overseas demand, tariffs, exchange rates, and geopolitical risks on IP retail, white goods, robot vacuums, apparel/footwear OEM, and pet food companies.