Orient Securities has released a research report stating that the snack sector continues to demonstrate solid growth certainty following a system-wide slowdown in the first quarter of 2026. The report suggests focusing on three key areas: 1) companies that have completed channel and product category adjustments or shown improvements in operational quality; 2) companies possessing strong product iteration capabilities; and 3) companies with highly efficient supply chains that stand to benefit from declining costs. The main viewpoints of Orient Securities are as follows.

The trend of channel decentralization is continuing, enhancing the bargaining power of new retail formats, while online channels remain in a period of adjustment. It has been observed that the ongoing decentralization of channels, supported by suitable labor costs, provides a logistical foundation for the expansion of new business models like instant retail. Retail fulfillment efficiency and price advantages are expected to be the core competitive edges in the future development of new retail. Formats such as instant retail, discount stores, and membership-based supermarkets will continue to divert traffic from traditional supermarkets and individual retailers, thereby strengthening their influence over snack product categories. Online channels are currently still in an adjustment phase, with snack companies strategically streamlining their presence on content e-commerce platforms. From an annual perspective, the congestion in online channels remains high. For the snack food segment, discount formats and membership-based supermarkets currently represent the most significant sources of business growth. The discount sector is entering a phase of market share concentration, where leading brands continue to increase store density in core markets, while the number of stores operated by non-leading brands is declining. The growing influence of leading discount formats may continue to pose challenges to the profit margins of snack food companies.

Companies are gradually shifting from multi-category strategies back towards a focus on major product items, with reserve capacity being a key factor. The product lifecycle for individual snack items is relatively short. Categories such as egg products, vegetable products, and spicy snacks continue to show relatively strong growth rates. Considering factors such as base effects and consumer purchasing power, it is anticipated that the growth rates of core products for various snack companies will stabilize in the second and third quarters of 2026. It has been noted that since the second half of 2025, snack companies have been transitioning their category strategies from pursuing a wide range of products back to emphasizing major product items. However, given the persistent trend of channel decentralization, the ability to iterate on product items and maintain strong reserve capacity is still considered crucial for companies.

Investment recommendations and targets: Focus on turnaround opportunities and growth certainty. Recommended stocks include Salted Plank, Milkground, Qiaqia Food, related companies such as Weilong Delicious, Singing Busy, Wanchen Group, Three Squirrels, as well as beverage industry leaders Nongfu Spring and Dongpeng Beverage. Risks to consider include food safety issues, adjustments in industrial policies, and changes in management.