With prescriptions for semaglutide drugs, including Wegovy and Ozempic, on the rise, food sellers are increasingly fielding questions about the possibility of a significant shift in how — or how much — people eat.
The increasingly popular drugs generally work by reducing patients’ appetites. With 1.7% of America’s population prescribed a semaglutide drug in 2023 — up 40-fold in the past five years — that could spell serious trouble for the food industry.
For now, they seem to be thinking about these drugs the way they do food fads: Keeping a sharp eye on consumer behavior, and thinking about ways to capitalize on trends. But they may need to take the rise of this class of drugs more seriously than fad diets, some industry analysts say.
During a Thursday call with Wall Street analysts, Conagra (CAG) CEO Sean Connolly said that the company will adjust as needed if customers eat less or want different types of food.
“Let’s say they go to smaller portions, then we evolve the innovations, and we design smaller portions,” Connolly said.
“If they switch to different types of nutrients … we switch to different types of nutrients,” he said. “If they change the kind of pack sizes they snack on, we’ll change that.” Conagra has a wide portfolio of food brands, including Healthy Choice, Duncan Hines and Marie Callender’s.
This type of approach is nothing new. Big food companies are constantly evolving their products to adapt to consumer trends. And with wellness top of mind for many — not just people taking semaglutide drugs — companies have already tweaked their products in an effort to appeal to health-conscious consumers.
PepsiCo (PEP) and Coca-Cola (KO) offer their products in smaller sizes for customers who want help with portion control (or who want to spend less). Soda companies have been phasing out the word “diet” in favor of “zero sugar” for more relevant branding. And major brands like Mondelez acquire small, trendy ones to help them adapt to rapidly changing tastes.
But diet fads come and go. This could be different.
Drugs like Ozempic “have the potential to have a bigger impact on food consumption … than, arguably, anything that we’ve seen before,” said Bernstein analyst Alexia Howard. Change won’t happen overnight, she noted, but it could be long lasting.
“With this class of drugs, I think the question really is, how many people are prepared to try them?” Howard said. “And then what is the churn rate?” To adapt to a possible shift, companies should be “planning for different scenarios,” she said.
Walmart (WMT) US CEO John Furner recently told Bloomberg that the company’s internal data suggests customers who take Ozempic purchase slightly less food than the total population, although he cautioned it was too early to draw any conclusions from the anonymized customer data. In response to a request for comment from CNN, Walmart said it had nothing to add.
“[Anti-obesity medication] uptake could drive a broad and lasting behavioral shift among a sizable demographic group that represents a disproportionate share of food consumption,” warned Morgan Stanley analysts in an August research report.
Companies will likely change their offerings in response to the adoption of these types of drugs, Morgan Stanley analyst Pamela Kaufman and others wrote in an additional note in September.
For some, that will be a bigger lift than for others.
“We see companies with high exposure to less healthy foods such as snacks, confectionery, and sweet baked goods as most impacted,” according to the September dispatch. Brands like Hostess, which makes Twinkies, Ding Dongs and HoHos, could take a hit.
Smucker, which recently announced that it is acquiring Hostess, doesn’t seem too concerned.
“There are multiple ways that consumers will continue to snack,” said CEO Mark Smucker during a September analyst call discussing the acquisition.
“Sweet snacks are going to continue to be on the radar,” he added. “We view that our projections here are sound.”
Plenty of circumstances could reduce the impact of drugs like Ozempic on the food industry: Interest in these drugs may die out, or demand could outstrip supply. Or people who take the drugs may not change their diets in ways that meaningfully impact food sellers.
And it could benefit certain parts of the industry, including sellers of more nutritious foods.
“People who take these medications do definitely get appetite suppression [and] eat smaller quantities,” noted Jody Dushay, assistant professor of medicine at Harvard Medical School. “Dieticians and physicians who prescribe it tell people that if your intake has reduced, you want to focus on eating highly nutritious foods as opposed to low quality food.”
— CNN’s Parija Kavilanz and Deidre McPhillips contributed to this report.
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