The growing use of weight-management drugs such as Ozempic and WeGovy is not only curbing appetites but also posing challenges to the packaged-food industry’s growth forecasts.
GLP-1 drugs, designed to mimic a hormone signaling fullness to the brain, are leading users of diabetes medications to eat less and make healthier food choices. In theory, this poses a threat to junk food brands that specialize in high-fat and high-sugar processed foods.
Already, the impact is visible, with Walmart CEO John Furner noting a “slight pullback in overall basket” among users of weight management medications compared to the general population, resulting in fewer units and slightly fewer calories consumed.
Barclays, the British bank, also warned of potential dampened demand for companies like PepsiCo, known for its sugary drinks and snacks like Cheetos and Doritos. Mondelez, which includes brands like Cadbury, Toblerone, Oreo, and Chips Ahoy!, faces a similar threat.
Fast-food chains, including Domino’s Pizza, McDonald’s, KFC, and Krispy Kreme, are being urged to reconsider their menu offerings as early data indicates that over 70% of users of these drugs visit fast-food restaurants less frequently, according to a Morgan Stanley report.
However, it’s important to note that there is limited evidence to suggest an immediate, widespread transformation of supermarket shelves worldwide. These weight-management drugs primarily cater to the affluent due to significant barriers such as high costs, limited supply, and limited insurance coverage.
History also reminds us that it takes substantial efforts to curb the world’s appetite. Trends and preferences change, and while the popularity of various snack categories may fluctuate, the packaged food industry has consistently grown stronger.
Key Figures:
9 million prescriptions for weight-loss drugs were written in the US in the fourth quarter of 2022.
Morgan Stanley estimates that by 2035, 24 million people in the US (7% of the population) could be taking hunger-suppressing drugs.
Among the 300 patients taking GLP-1 drugs, there was a 20-30% reduction in daily calorie intake, according to Morgan Stanley.
The GLP-1 drug market could be worth $100 billion by 2030, with Eli Lilly and Novo Nordisk in the lead, according to JPMorgan.
United Airlines could save $80 million on fuel costs if every passenger lost an average of 10 pounds.
Industries potentially impacted by widespread use of weight-loss meds include medical device manufacturers, furniture and discretionary goods providers, and alcohol and tobacco producers.
While some sectors may face challenges due to the growing use of weight-management drugs, it’s worth considering their resilience and adaptability, as seen in the tobacco industry after the 1990s tobacco trials.