Yuanta Securities (Thailand) assesses that the Thai beverage sector’s normalized profit in 2Q26 is expected to be flat year-on-year and forecasts a quarter-on-quarter improvement due to seasonal factors, despite companies beginning to face higher production costs from increased packaging and energy expenses after the expiration of key cost lock-in contracts amid ongoing geopolitical tensions.
Persistently high domestic oil prices continue to constrain local purchasing power, and the sector also faces a high base effect compared to the previous year, when there was no impact from the Thailand-Cambodia border conflict. These factors are expected to lead to a year-on-year profit decline for CBG and SAPPE.
However, overall sector performance is supported by other companies: OSP should see profit growth despite lower revenue from Myanmar operations, thanks to efficient expense management; ICHI’s growth is driven by rising revenue and a reduction in effective tax rates; COCOCO benefits from declining coconut prices; and TACC is set to expand alongside the growth of 7-Eleven and Punthai Coffee.
Yuanta notes that current estimates for the beverage sector reflect potential upside from El Niño. According to data from the U.S. National Oceanic and Atmospheric Administration (NOAA), there are increasingly clear signals of an upcoming El Niño phenomenon, likely beginning between May and July 2026.
There is more than a 70% probability that this will be a ‘strong’ or ‘very strong’ El Niño lasting nine to twelve months. Such conditions are expected to result in record global temperatures in the second half of 2026 through the first half of 2027, with above-average temperatures and reduced rainfall in Asia and Oceania, and more frequent heatwaves in the United States, directly boosting demand for beverages.
Historical data show that during the last ‘strong’ El Niño (ONI Index peaking at 2.0°C) in 2023-2024, normalized profit for the beverage sector rose by 15.1% and 32.3% year-on-year, respectively. The previous El Niño in 2019-2020 saw earnings rise by 50.8% and 17.5%, underscoring El Niño’s significant role in enhancing beverage demand.
Although Yuanta expects sector profit in 3Q26 to decline quarter-on-quarter due to the rainy season, any decline could be less than usual (or even flat) thanks to El Niño and the ‘Thai Chuay Thai Plus’ relief program.
Year-on-year, the figures are projected to grow 6-9%, with CBG poised for a rebound from last year’s low base due to the Thai-Cambodia border conflict. Other companies in the sector, specifically OSP, COCOCO, and TACC, are expected to continue their growth, while ICHI and SAPPE may see lower profits from higher packaging costs.
Nevertheless, the brokerage has already lowered assumptions for affected stocks to reflect these risks and believes current forecasts and share prices now offer limited downside.
According to Yuanta, the ‘Thai Chuay Thai Plus’ program represents additional upside not yet included in current estimates. Besides benefits from El Niño, the beverage sector should also gain from the stimulus initiative running from June to September 2026, with an allocated budget of THB 176 billion—substantially larger and longer in duration than the previous ‘Khon La Khrueng’ program in 2H25 (THB 44 billion). Combined with unusually hot weather, these factors could push beverage sector profits in 2Q26 and 2H26 above earlier expectations, even during the industry’s low season.
Potential upsides now include a quicker-than-expected easing of tensions in the Middle East, a faster-than-expected drop in global oil prices, alleviating packaging costs, and additional demand from both El Niño and the ‘Thai Chuay Thai Plus’ program. Yuanta has raised its sector weighting to ‘Overweight,’ with a preference for CBG, SAPPE, OSP, and ICHI, with target prices of THB 50.50, THB 39.50, THB 20.00, and THB 15.20, respectively.
