BIMB Research said it expects the food and beverage segment to remain a defensive earnings anchor this year.
PETALING JAYA: The consumer sector is expected to deliver steady, sustainable growth in 2026, underpinned by resilient domestic demand, a stable labour market, and sustained tourism activity, according to BIMB Research.
“While policy-driven income support measures introduced in 2025 are expected to normalise, we believe underlying consumption remains intact, supported by structurally higher wage bases, containing inflation, and steady employment conditions.
“Against a backdrop of fiscal reforms and external uncertainties, consumption patterns are increasingly skewed toward value-for-money (VFM) and essential categories, which we see as key structural outperformers in the coming year,” it noted.
BIMB Research said it expects the food and beverage segment to remain a defensive earnings anchor this year, supported by stable demand for essential food and beverage products even as overall consumer spending normalises.
It said while selected commodity prices such as cocoa, robusta coffee, and whole milk powder are likely to remain elevated, other inputs including sugar, wheat, and feed costs have largely stabilised from prior peaks.
A stronger ringgit forecast of average RM4.1 in 2026 should partially mitigate imported cost pressures and support margin stability, the research house said.
“In contrast, the discretionary segment is expected to see moderate growth, reflecting a more cautious consumer environment.
“Retail Group Malaysia’s downward revision of retail growth to 3.1% for the remaining quarters of 2025, alongside expectations for an overall 1% decline in retail sales, underscores the softer near-term outlook, particularly for premium and non-essential categories.
“Uncertainty surrounding the expanded sales and service tax (SST), especially imported premium goods, may further weigh on high-end discretionary demand, “ the research house said.
Nevertheless, the research house said the consumer sector is entering a period of significant valuation re-rating in the first quarter of financial year 2026, driven by an exceptional concentration of domestic liquidity and seasonal demand.
Additionally, BIMB Research said a critical catalyst is the strategic timing of government fiscal injections, which include the Phase 1 Sumbangan Tunai Rahmah payments as well as the nationwide RM100 Bantuan Sumbangan Asas Rahmah credit on Feb 9.
“This direct infusion of billions in disposable income is arriving at a unique historical juncture where the traditional Chinese New Year celebrations on Feb 17 almost perfectly overlap with the start of Ramadan,” it noted.
“This ‘double-festive’ convergence is forcing a massive front-loading of household spending on both festive luxuries and essential staples, providing retailers with an unprecedented boost in inventory turnover and top-line revenue right at the start of the fiscal year.”
With international tourist arrivals expected to surge in the wake of the Jan 1 campaign kickoff, BIMB Research said retail hubs in the Klang Valley and Penang are seeing a distinct shift toward higher-margin, premium-ticket spending that complements the steady floor provided by domestic shoppers.
It said this dual tailwind of local cash injections and international tourism is expected to drive significant operating leverage and margin expansion across the consumer sector.
Overall, the research house said it is maintaining its “overweight” stance on the consumer sector, premised on resilient domestic demand, structurally higher income levels, and continued tourism support.
“While risks from SST adjustments and geopolitical tensions remain, we believe their impact on overall consumption will be contained, with consumers more likely to trade down rather than cut spending outright,” the research house said.
In this environment, it said companies aligned with essential consumption and VFM propositions are best positioned to outperform.
BIMB Research top sector picks are MR DIY Group (M) Bhd
, supported by store expansion, KKV Supplier Chain Sdn Bhd acquisition and disciplined cost management.
An analyst with a local brokerage told StarBiz the prospects of the consumer sector for 2026 are bright overall amid some downside risks.
He said the sector outlook for 2026 would be driven by resilient domestic demand, supportive government fiscal measures (like cash aid), steady wage growth and a strong tourism rebound from Visit Malaysia 2026, boosting staples, retail, and healthcare although VFM brands remain favoured amidst cost pressures.
However, he said investors should focus on companies with strong pricing power, operational adaptability, and value propositions.
He added that companies like MR DIY, Aeon Co (M) Bhd and Leong Hup International Bhd are cited for their mass-market and staple exposure, and F&N favoured for its defensive food and beverages profile.
Furthermore, the analyst also said that the downside risk for the sector would be cost pressures and global trade uncertainty.
He noted that higher living costs could lead to increased price pass-through risks for consumers, and weaker-than-expected export growth could impact the broader economy.
