China Consumer Staples June Sequentially Improved but Demand Remains Weak; Value Retail and Cost Relief Were the Main Highlights

Overview

This report summarizes Goldman Sachs' discussions with more than 15 China consumer staples companies during the APAC Consumer & Leisure Corporate Day and combines these with June channel-tracking work across beer, beverages, dairy, snacks, condiments/prepared foods, and F&B value retail. The overall conclusion is that June improved sequentially from a weak May, but demand has not fully recovered and weather, foot traffic, and sentiment remain the main headwinds.

Core views

The report's core view is structural divergence rather than a broad recovery. Dairy demand has shown resilience, with Mengniu and Yili's liquid milk posting low single-digit positive growth in June; value retail continued to expand fastest, with Wanchen and Busy Ming maintaining strong store-opening pace; beer sales improved versus May but remain pressured; beverages were clearly differentiated, with Nongfu's unsweetened tea showing strong growth while bottled water remained weak, Tingyi maintaining low single-digit growth supported by tea beverages and promotions, and Eastroc and CR Beverage under pressure. Most companies reported easing input cost pressure, but weak consumption and competition have made brands cautious on broad-based price increases.

Analysis framework

The report uses company update feedback, monthly channel checks, sub-industry sales/turnover tracking, store expansion and same-store GMV tracking, raw-material price monitoring, and peer valuation comparison to assess June operating trends, 2H26 cost and expense pressure, channel-structure changes, and stock opportunities.

Methodology notes

• Channel ResearchMonthly Channel Checks and Company Update Day

  Cross-validates monthly trends in sales, inventory, expenses, and costs through management dialogue and channel-side checks.

  The report compared June with May, April, and year-ago comparatives, and interpreted sequential improvement while factoring in factors such as Dragon Boat holiday timing shifts, weather, and inventory conditions at HSA channels.

• Operating TrackingSub-Industry Monthly Tracking

  Tracks sales, growth, and channel changes by dividing the sector into beer, beverages, dairy, snacks, condiments/prepared foods, and value retail.

  This split helps identify structural pockets and pressure sources within the sector, such as stronger relative performance in unsweetened tea, liquid milk, value retail, and Chacha, versus pressure in some beer, bottled water, and snack names.

• Valuation and FactorsCovered-Company Valuation Comparison and GS Factor Profile

  Assesses relative stock attractiveness by combining valuation, growth, financial returns, and a comprehensive factor framework.

  The report includes peer valuation comparisons and states that the Goldman Sachs Factor Profile evaluates growth, financial returns, valuation multiples, and composite percentile.

Asset mapping & comparison

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

• F&B Value Retail: Busy Ming, Wanchen

  Core beneficiaries

  Strengths

  Rapid store expansion with large longer-term upside for penetration and category expansion; same-store trends at Wanchen remain relatively healthy.

  Weaknesses

  Same-store GMV and same-store sales in the second half of June were hurt by adverse weather.

  Comparison

  Relative to traditional channels, value retail remains the fastest-growing channel.

  Risks

  Excessively fast store growth, declining single-store efficiency, and fluctuations in weather and consumer sentiment.

• Dairy: Mengniu, Yili

  Demand-resilience area

  Strengths

  June liquid milk sales delivered low single-digit positive growth, improved versus May, and Mengniu maintained its sales outlook.

  Weaknesses

  Overall demand is still gradually recovering, and sector supply-demand changes still require monitoring.

  Comparison

  Compared with beverages and beer, dairy has shown greater resilience.

  Risks

  Weaker-than-expected consumption recovery, raw milk supply-demand shifts, and promotional pressure.

• Beer: CR Beer, Tsingtao, Bud China, Chongqing

  Peak-season improvement but still pressured

  Strengths

  June volumes improved versus May; CR Beer performed better than peers and maintained a positive beer-business outlook.

  Weaknesses

  Weather and foot traffic were adverse, and sales for some companies remained under pressure.

  Comparison

  CR Beer outperformed some peers, with declines at Budweiser and Chongqing narrowing though pressure remains.

  Risks

  Unfavorable peak-season weather, inflation in logistics and aluminum costs, and rising O2O promotional spending.

• Beverages: Nongfu, Tingyi, Eastroc, CR Beverage, UPC

  Clear divergence

  Strengths

  Nongfu's unsweetened tea, Oriental Leaf grew about 40% year-over-year, and Tingyi beverages maintained low single-digit growth.

  Weaknesses

  Bottled water, foot traffic, and shipment pace for some companies were pressured; Eastroc slowed sequentially in June, and CR Beverage was weak in 2Q.

  Comparison

  Unsweetened tea outperformed bottled water, and Tingyi outperformed UPC.

  Risks

  Weather, weak foot traffic, promotional competition, cooler deployment timing, and PET price volatility.

• Snacks: Chacha, Weilong, Yankershop

  Select opportunities

  Strengths

  Chacha's growth accelerated in June, benefiting from easing competitive intensity, value retail cooperation, and favorable cost backdrop, leading to an upgrade to Buy; Yankershop benefits from channel-structure upgrades.

  Weaknesses

  Snack brands were generally weak in June, with Weilong facing greater pressure.

  Comparison

  Chacha performed stronger than other snack peers.

  Risks

  High comparatives, intensifying competition, rebound in raw material prices, and slower-than-expected channel expansion.

• Condiments/Prepared Foods: Haitian, Yihai, Anjoy, Jonjee

  Execution and low-base recovery opportunity

  Strengths

  Haitian improved in June/May versus April, Yihai's third-party sales maintained high single-digit to 10% year-over-year growth, and Anjoy grew 10% to 15% in June from a low base.

  Weaknesses

  Haitian's 2Q26 growth slowed, while Jonjee weakened sequentially in May/June versus April due to a high base.

  Comparison

  Yihai's execution and dividend support were more pronounced, while Anjoy showed clearer low-base recovery.

  Risks

  Channel inventory management, weak demand recovery, competition, and input-cost changes.

Key data

• Company Coverage ScopeMore than 15 consumer staples companiesFrom APAC Consumer & Leisure Corporate Day feedback.
• June Sector TrendMost companies improved sequentially versus May, but overall still weakThe improvement was supported by a low base, Dragon Boat holiday timing shifts, and channel inventory conditions; weather continues to weigh on beverages, beer, and foot traffic.
• Value Retail Store Opening PaceLeading brands opened roughly 1,000 to over 1,500 new stores per month in May and JuneWanchen opened at least 4.7k stores cumulatively in 1H26 and added roughly 4.1k net stores, while Busy Ming also maintained steady expansion.
• PET Pricearound RMB7.2k/t recently, down from the May early peak of RMB9.6k/tThe pullback in PET costs makes beverage-sector cost pressure in 2H26 more manageable.
• Raw Milk Priceabout RMB3.0/kg since mid-June2Q26 QTD average raw milk price was down in the low single digits year-on-year.
• Cattle Herddown 4.2% year-over-year in May 2026Used to assess supply-side changes in the dairy sector.
• Dairy OutputChina's dairy output was up 8.7% year-over-year in May 2026Indicates that supply and demand should still be interpreted together.
• Goldman Sachs Global Coverage Rating DistributionBuy 50%, Hold 34%, Sell 16%Disclosed in the appendix using global stock coverage rating distribution as of 1 April 2026.

Impact & implications

For investors, the report suggests that opportunities in China consumer staples are more concentrated in channel-structure upgrades, easing costs, and companies with stronger execution, rather than a broad demand rebound. Expansion in value retail may continue to raise channel penetration of food and beverage brands; dairy and some condiments/prepared foods appear to offer defensive characteristics due to stable demand, share gains, and dividend support; beer and beverages in peak season remain highly exposed to weather, foot traffic, and competitive cycles.

Risks

• Consumption sentiment remains persistently weak, leading to lower sales and weaker pricing power than expected.
• Adverse weather continues to hurt beer, beverages, and dining/travel-related consumption.
• After rapid value-retail store expansion, single-store GMV may decelerate.
• Competition and terminal promotions intensify, compressing gross margin and fee ratios.
• Prices for logistics, aluminum, PET, edible oils, and agricultural inputs move higher again.
• Channel destocking or shipment-rate control causes short-term revenue volatility.

What to watch

• Weather and foot-traffic changes in July and 3Q26 peak season.
• The extent of year-on-year recovery in July, August, and September 2025 under low-base effects at restaurant and retail levels.
• Whether PET prices can stay below the May peak and whether cost relief can translate into margin improvement.
• Whether 3Q value retail store-opening pace, single-store GMV, and same-store sales remain stable.
• Whether brands continue to avoid broad-based price hikes and instead rely more on new products, portfolio mix, and cost-efficiency gains to improve profit.
• The durability of Chacha's repricing power, cost tailwinds, and channel partnerships after the upgrade.