It’s no secret that most consumers in China haven’t been in a mood to spend big. But what would get them to open their wallets is so far from reality that Jefferies analysts said Wednesday it’s up to companies to find ways to grow on their own. The analysts’ “random check” of consumers in mainland China found people said they’d spend more — if property prices or salaries rose by 20% to 30%. Very unlikely, given that home prices fell in October and the word on the street is more likely to be about layoffs than promotions. Alibaba confirmed Friday it is replacing the December version of its Singles Day shopping event with a promotion that simply translates as “year-end good price festival.” Analysts generally say that for consumers in China today, daily essentials, rather than discretionary goods, are in. So are products perceived to be of high quality. That favors traditional Chinese brands Kweichow Moutai — the famed alcohol company — and Mengniu — a dairy products giant. Top picks Both are on Jefferies’ top picks list for the China consumer in 2024. The analysts forecast 22% upside for Shanghai-traded Moutai from its close on Friday, and 60% in gains ahead for Hong Kong-listed Mengniu. The two companies are so large they’re among the six Chinese businesses that made it into a list of the world’s 50 largest consumer goods suppliers for 2022, according to an annual report from OC & C Strategy Consultants released Wednesday. Nestle, PepsiCo and Procter & Gamble held the top three spots, in descending order. “Chinese spirits player Moutai drove gains in revenue and profits by focusing on direct to consumer,” OC & C said in a release. “They launched a new dedicated app to expand its reach, resulting in direct sales more than doubling in size and accounting for 40% of total revenues.” In addition to being a staple at business dinners in China, Moutai has tried to branch out with co-branding in chocolate, ice cream and coffee. Jefferies’ other top picks to…
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