At the beginning of the year, liquor stocks continued to fall sharply, are liquor stocks worth buying in 2024?

© Text/Wine Network Team

"Zhang Wansen, it's snowing. ”

At the beginning of 2024, when there was "snow" everywhere in the cinema, the liquor stock market also encountered a "cold snap" and "continuous cooling".

Recently, the liquor sector has continued to "drift green", and the stock prices of some liquor companies have even hit a new low in three years, pouring cold water on people who are looking forward to a "good start". Is the liquor industry going to follow the old path of 2023 in 2024? Is 2024 worth looking forward to in the liquor industry?

The continuous decline in stock prices does not mean that the wine industry is "not fragrant"

First of all, the influencing factors of stock price rise and fall are complex, and its temporary fluctuations cannot be used as the main basis for judging the development of the industry.

Secondly, the decline of liquor stocks was affected by many factors such as global economic uncertainty, high market valuations, and sluggish consumption in the liquor market. And in recent days, the overall performance of A-shares has been poor, and the Shanghai Composite Index once fell below 2,900 points, which has reduced investors' confidence in the entire A-share market, and the liquor sector, which is one of the core sectors of the A-share market with a market value of 3,752.099 billion yuan, has also been affected by the weakness of the stock market.

In addition, many institutions expect that the current market valuation of A-shares is at a historical low, and after the decline at the beginning of the year, the market can be expected to recover throughout the year. As a number of A-share listed companies collectively announced buybacks or increased holdings, the A-share market has rebounded since January 9, with the three major indices rising slightly and investor confidence also increasing. Similarly, after the general decline in 2023, the liquor sector has now further returned to rationality, and the value of the bottom allocation is highlighted, and there may be more recovery potential in 2024.

The liquor industry has strong profitability and anti-risk ability, and with the upgrading of consumption, the demand for liquor market is still strong. Therefore, for long-term investors, the liquor sector has good investment potential, and as the A-share market undergoes a correction, the valuation bubble of some high-quality liquor stocks has disappeared, which provides investors with good buying opportunities.

All in all, the continuous decline of liquor stocks does not mean that the liquor industry is "not fragrant", not to mention that liquor, as a pro-cyclical high-quality asset, is optimistic about the resilience of the rebound with the recovery of macro consumption, and the liquor sector may not "fall and fall".

Policy support promotes the high-quality development of liquor

This year marks the 75th anniversary of the founding of the People's Republic of China and a crucial year for achieving the goals and tasks of the 14th Five-Year Plan. The Central Economic Work Conference requires that in 2024, it is necessary to adhere to the principle of seeking progress while maintaining stability, promoting stability through progress, establishing first and then breaking down, and introducing more policies that are conducive to stabilizing expectations, growth, and employment, and actively forging ahead in changing the mode, adjusting the structure, improving quality, and increasing efficiency, so as to continuously consolidate the foundation for stability and improvement.

In 2024, the potential of domestic demand and policy space will be further released, and the domestic reserve requirement ratio and savings interest rate are gradually reduced. When the macroeconomic environment is in a period of low interest rates, people are more willing to invest money in consumption and the stock market rather than choose to save, and this capital flow will have a positive impact on stimulating liquor consumption. At the same time, when the deposit interest rate is lowered, the cost of bank liabilities is reduced accordingly, which creates conditions for banks to provide lower interest rates on the loan side, which can stimulate the activity of the credit market, and will play a role in boosting the investment of liquor enterprises and the consumption of liquor by consumers more.

In addition, there are certain favorable factors in the international environment. On the one hand, the market generally predicts that the Fed's current round of interest rate hikes is nearing the end, and the macro policy tightening of major developed economies tends to peak or even turn. On the other hand, after the San Francisco meeting, China-US relations have shown positive signs, and the continuous improvement and development of China-US relations is in line with the interests and aspirations of the people of the two countries and the expectations of the world. With the weakening of external constraints, the overall economic environment will gradually recover, and the pressure on the liquor industry to recover will be further reduced.

The basic trend of the mainland's steady economic recovery and long-term improvement has not changed, and the factors and conditions supporting the high-quality development of the liquor industry have continued to gather and increase, which undoubtedly brings more confidence and expectations to practitioners in the liquor industry.

Wine companies have responded positively and developed with strong resilience

2023 is a year of turning and differentiation in the new cycle of the liquor industry, in the face of multiple challenges such as uncertainty of the overall economic environment, weak consumption, overcapacity, high inventory and price inversion, the liquor industry has shown strong development resilience.

Recently, a number of liquor companies announced their main operating data for 2023, among which Moutai's annual revenue is nearly 150 billion, and Jinshiyuan and Xifeng are newly promoted to the "Liquor 10 Billion Club". Under the weak cycle of the industry, liquor companies have achieved good results in steady growth against the trend, which fully proves the long-term positive trend of the liquor industry and the strong development potential of liquor companies.

After adjustments and changes in 2023, major wine companies will have more experience in coping with difficult problems in 2024 and more confidence to face challenges.

In terms of the market, the recent conferences of major wine companies and distributors have been held one after another, and the business strategies, channel plays, marketing policies and recent good start strategies for 2024 have been set one after another. The launch of the Year of the Dragon Zodiac wine, the formulation of incentive policies for channel providers, the price increase to compete for channel funds, and the layout of terminal promotional activities, the "Spring Festival Marketing War" is fierce, and the overall sales situation is relatively optimistic. At present, Kweichow Moutai has completed the payment collection work in 2023, Wuliangye has successively signed channel contracts for 2024, and the payment collection progress of other famous wine companies is also relatively smooth, and the advance collection work is progressing steadily.

In terms of products, the major leading brands have clarified the development direction of optimizing product structure and improving product quality. In 2024, Moutai will focus on building a brand product structure of "matching product price, clear hierarchy and reasonable gradient", and adhere to the principle of "only reducing but not increasing" of total distribution products; Wuliangye will continue to increase the market share of Wuliangye's main brand and optimize the planned allocation of Wuliangye's products; Under the brand strategy of "one body and two wings", Fenjiu will strengthen its product positioning, and develop blue and white, Xinghua Village, and Zhuyeqing step by step......

At the same time, major liquor companies conform to the development trend of the liquor industry, deepen digital transformation, accelerate the upgrading of the industrial chain, and form new quality productivity; Do a good job in product personalization, fragrance type expression, and create new categories; Close to young consumer groups, explore the liqueness, health, fashion and culture of products; Promote the construction of green ecological production areas and maintain the sustainable development of the liquor industry.

2024 is a critical year for the development of the liquor industry, and for major liquor companies with clear development strategies, there is pressure and motivation, and it is a challenge and an opportunity.

Mo Yan once said in "The Late Bloomer", "Real strength is not confrontation, but allowing it to happen". There is nothing to be afraid of when the stock market is off to a green start, and the strong resilience of the liquor industry still exists.

With the continuous recovery of the liquor consumption market and the gradual digestion of industry inventory, the liquor industry as a whole is rebounding from the bottom, although the trend of stock competition is difficult to change, and the competition to accelerate differentiation is becoming increasingly fierce, we believe that the future of the liquor industry is worth looking forward to, and 2024 will not follow the old path of 2023, but will embark on the "flower road" of high-quality development.