Guolian An: The consumer goods industry is entering a new stage of brand creation

——Investment strategy for medicine and food and beverage industry in the second quarter of 2005

Guolian Security Research Department

　　 1、 Food and beverage

　　 Investment theme: liquor and beer enterprises with terminal price control power

In 2005, the sales situation of food and beverage consumer goods was encouraging. From January to February, the wine, liquor and meat processing and manufacturing industries all showed a trend of rapid growth in revenue and profit; The dairy industry maintained a rapid growth in revenue, while the profit growth was relatively lagging behind, which was similar to the situation of the previous year; As the beer industry is in the slack season at the beginning of the year, the sales growth is not obvious and the profit margin is low. From the perspective of profitability, the gross profit rate of the wine industry increased, which increased the net profit rate of sales before tax, and the dairy industry performed poorly. The marketing expenses of each sub industry rose rapidly, while the management expenses were relatively high.

　　 Beer industry

The development of the beer industry has entered a stage of healthy competition. With the accelerated growth of output, the beer industry reached a new high of 29.1 million tons in 2004. In 2004, the total output value, product sales revenue and total profits and taxes of the national beer industry were 64.6 billion yuan, 62.4 billion yuan and 14 billion yuan, respectively, up 15%, 17.6% and 16.7% over the same period of the previous year. The beer industry has stepped out of the trough of continuous decline in the overall efficiency of the industry in recent years. For the first time, the total production and sales volume, product profitability, debt service ratio of assets and market competitiveness have experienced strong recovery growth, and achieved the best performance in nearly six years. The speed of beer enterprise group and scale continued to accelerate, the number of beer enterprises across the country continued to decrease, and the scale of enterprises continued to expand. Capital mergers and acquisitions continue to take place, which has greatly improved the concentration of the beer industry. The leading effect of the industry is becoming increasingly obvious, and the market competition structure of the beer industry has been further adjusted and optimized.

The concentration of the beer industry has been strengthened. In 2004, the revenue of the top ten enterprises in the industry increased to 55% of the total revenue of the industry, and the proportion of profits in the total profits of the industry increased from 148% in 2002 to 195%. Most of the increase in revenue and the proportion of profits should come from the benefits of integration. In 2005, the income of the top ten companies in the industry accounted for 60% of the total income of the industry, and the benefits of the industry were obvious.

The beer market in China has basically formed a pattern of separation of several giants. The standardization and concentration of the industry have provided a favorable environment for raising the price of a ton of beer and ending the price war. Harbin Beer, Qingdao Beer（ information quotation forum ）On April 1, 2004, Yanjing Beer（ information quotation forum ）The prices of the products were raised on July 23. Although the prices of water, electricity and coal transportation were rising, the prices of beer barley were rising, and the company's costs were rising, the major companies in the industry were able to basically absorb the rise in costs. With the deepening of industry integration, the profitability of beer enterprises is expected to further improve. We believe that the beer industry has gradually appeared an inflection point at the end of 2003 and the beginning of 2004, and the overall industry has preliminary investment value.

　　 Liquor industry

The adjustment of China's liquor industry tends to be stable. In 2004, liquor enterprises above the designated size achieved sales revenue of 58.432 billion yuan; The total profit was 3.826 billion yuan, up 15.2% year on year. The profit of the national liquor sales industry increased significantly, indicating that the enterprise's product structure adjustment has achieved results. The output of key liquor enterprises began to decline in 1997, and finally increased in 2003, which shows that the liquor industry has entered a relatively stable and reasonable stage after continuous running in and baptism, whether in the proportion of the whole liquor industry, or in the restructuring and reconstruction of its own regions, enterprises, brands and categories. The industrial adjustment of liquor industry has basically stabilized. The stability of the liquor industry is mainly attributed to the improvement of economic benefits of large enterprises. It shows that key enterprises are the direct driving force for the development of liquor at present, and it also reflects that the degree of polarization of liquor enterprises in China has further increased. The stronger the stronger, the weaker the weaker. It also shows that only large liquor enterprises have investment value.

High end liquor grows by 8-10% every year, with only two high-end brands Wuliangye（ information quotation forum ）And Guizhou Moutai（ information quotation forum ）It is worth paying attention, but at present, because Wuliangye's sales of middle and low-end liquor are stagnating, the current growth mainly depends on the sales of high-end 52 degree Wuliangye. The sales base of liquor in Moutai, Guizhou is relatively low, and the future growth is good. The annual production expansion is about 1000 tons. After the price of its products rises, the market can accept it steadily. We are optimistic about its sustainable and stable growth capacity. The long-awaited reform of liquor consumption tax policy has made new progress, and the reduction of liquor consumption tax rate has been achieved treasury department The recognition of Wuliangye will play a certain role in increasing the sales of middle and low grades and accelerating the maturity of high-end wine cellars in the future.

　　 Dairy industry

In recent years, the growth rate of dairy consumption of urban residents in China has been more than 20%. In 2004, the per capita consumption of dairy products (converted into fresh milk) of urban residents has reached about 27 kg. After several years of rapid growth, the growth rate will relatively slow down in the future. It is expected that in 2005, the growth rate of per capita consumption of urban residents will remain at about 15%, and the per capita consumption may reach 30 kg.

On the other hand, the newly added dairy cows on hand in the first two years have gradually entered the lactation period or peak period, and the production enterprises have paid more and more attention to the large-scale feeding of dairy cows and the improvement of technical level. As a result, since January 2004, the milk output of enterprises across the country has continued to maintain a rapid growth trend, and the growth of milk consumption will be relatively slow. This will lead to more intense competition among liquid milk enterprises. At present, most of the domestic UHT enterprises are in homogeneous product competition. Therefore, price competition has become the main means of competition in the dairy industry at present. Under the current situation of gradual overcapacity, the gross profit rate of dairy enterprises will gradually decline. In fact, this trend has been very obvious from 2003 to 2004, and the growth rate of profits has been relatively slow. Our investment in dairy enterprises mainly considers the following two aspects: rich product lines and strong new product development capability. Enterprises with large scale and strong control over retail terminals.

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