Will domestic consumer goods become the next market hotspot, from "indestructible pots" to "indestructible stocks"?

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"Turn the tide in July, flourish in August"—the bull market for A-shares continued to burn in September, and the long-underestimated consumer stocks have gradually come into the market's focus.

Unlike previous bull markets, this round sees traditional consumer sectors such as liquor, duty-free, and home appliances no longer leading the broader market or the consumer stocks. The various "Moutai Index" stocks have all performed rather ordinarily.

On the contrary, segment leaders that align with mass consumption characteristics, can spark consumer enthusiasm, and resonate with public sentiment are gradually attracting investment attention. Sometimes, a real slice of lemon, a pot that won’t burn after endless cooking, or a pizza that you can’t get your hands on might suddenly trigger a “resonance point” for both consumers and investors, leading to notable market performance.

Can a single “pot” stir up a market rally?

On September 8, ASD surged rapidly after a slight dip at the open, reaching an intraday high of over 7%, and closing up 4.75% for the day.

ASD’s strong performance that day may be related to a viral video circulating during those days. The video came from a news story: "A man in Zhejiang forgot to turn off the fire after heating traditional Chinese medicine; the pot simmered on low heat for 27 days straight without accident." Interestingly, instead of just learning a fire safety lesson, netizens started to look for the super-strong pot that survived 27 days of cooking. Eventually, the pot was confirmed to be made by ASD, sparking a craze for this “indestructible pot.”

From a pot that can’t be burned out, to the search for a “super-strong pot,” the whole process was full of the internet’s current trends: “drawing inferences,” and “spontaneously manufacturing hot topics.” But behind it all is the bigger trend of domestic consumer goods companies: both quality and quantity improving, gradually earning brand recognition among nationals, and then step by step replacing foreign brands in market share.

A slice of lemon sparks a sales boom

Cases where breaking news incidents create consumer recognition are not unique.

This March, before and after Mixue Bingcheng’s IPO, there were discussions and heated debates about whether their lemon water actually used real, freshly-sliced lemons.

Eventually, after the public confirmed that Mixue Bingcheng’s lemonade truly used freshly sliced and muddled lemon, a consumption craze quickly formed. With all the praise and recognition, Mixue Bingcheng experienced a bull run after listing.

From the stock price, the lowest price on Mixue Bingcheng's first day of listing, 256 yuan, is still its historical low so far. Its highest price this year reached above 618 yuan—an increase of more than 140% for the year.

At the same time, Mixue’s latest mid-year report shows its revenue and profit both grew by nearly 40%. From the heat of the news to the fever in consumption, from consumption enthusiasm to investment frenzy—and with investment fever further fuelling in-store consumption—a virtuous circle of consumption has formed, something almost unimaginable in the past.

A pizza triggers a market champ

In fact, there are already precedents in overseas capital markets for iconic products driving sustained corporate growth.

Just this past August, a piece of news from Hebei caused quite a stir: the first Domino’s store in Handan opened with daily sales breaking 540,000 yuan and 6,020 orders, shattering the sales record of Domino’s stores worldwide.

The Domino’s behind this news has already been a long-term bull stock in the US market as a global consumer food service chain.

From the stock price, Domino’s—focusing on pizza—has soared nearly 30 times on the US stock market over the last sixteen years. This is closely tied to its precise product positioning, increasingly diverse product lines, and thus its vast growth space in consumer markets.

"Guochao" consumption—the major trend

Looking back at these cases, the rally behind ASD’s “good pot” represents the modern era of domestic consumer goods gradually iterating and upgrading. Against this mega trend, we can expect that the market’s increasing recognition for A-share consumer stocks clearly won’t end anytime soon.

Behind Mixue’s lemon tea case, we see the positive feedback loop between the business world and investment world within the consumer industry—this relationship is particularly obvious in the new consumer sector and related stocks.

Domino’s pizza, meanwhile, shows the immense global market for quality and reasonably-priced consumer products.

In this sense, the path of domestic consumer goods from “super-strong pots” to “super-strong stocks” will not stop but only broaden.

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