Goldman Sachs China Consumer Staples: March Check-in/1Q26 Preview - Broad-based 1Q Acceleration with Resilient March Trend
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Goldman Sachs highlights a broad-based acceleration in China's consumer staples sector for 1Q26. Following robust January and February shipments and strong Spring Festival restocking, March growth moderated but maintained resilience. This stability is supported by healthy channel inventory, a warm winter benefiting beer shipments, and positive same-store GMV growth in value retail.
The quarter showcased divergent performances across sub-sectors. Compound seasonings, ready-to-eat meals, and packaged meat led the acceleration. Dairy and beer recovered sequentially from low fourth-quarter bases. Value retailers sustained strong expansion. Conversely, most baijiu companies remain pressured by elevated bases stemming from anti-corruption policies initiated on May 18, 2025. Wuliangye is projected to see a 35% sales decline in 1Q26 as it controls shipments to stabilize wholesale prices.
Cost dynamics present a mixed outlook. Polyethylene terephthalate (PET) and palm oil trends are pivotal for 2Q26. Favorable PET hedging currently benefits beverage makers like Eastop Beverage, which targets 23% sales growth. However, cost pressures may emerge in the second half.
Goldman Sachs favors names with structural growth drivers or cyclical improvements. Top picks include Haitian Flavoring, Anjoy Foods, Mengniu Dairy, Yili, WH Group, Wanchen Group, and Kweichow Moutai. Key forward focus areas include cost trends, baijiu recovery timelines, value retailer expansion, and upcoming holiday sales performance.