- Wednesday, October 16, 2024
The CEO of Walmart Inc., Doug McMillon, recently discussed the potential effects of the new class of weight-loss drugs on consumer behavior. While it is still too early to make definitive claims, McMillon acknowledged that there are visible shifts in consumer preferences when it comes to losing weight.
One noticeable change is an increased demand for fresh foods, as people prioritize healthier eating habits. However, McMillon emphasized that predicting the long-term impact of these drugs remains uncertain and that the situation is still unfolding.
In a previous interview with Bloomberg, John Furner, the CEO for Walmart's operations in the U.S., mentioned that the company can track which customers are taking these drugs. He noted a slight decrease in overall shopping basket sizes and fewer units purchased, resulting in a modest reduction in calorie consumption.
Furner's comments led to a stock market decline for major beverage and snack companies such as Coca-Cola Co. and PepsiCo Inc.
The weight-loss drugs in question, including Ozempic and Wegovy, are primarily used for treating diabetes and aiding in weight loss. These medications work by replicating the effects of GLP-1, a gut hormone that helps regulate blood-sugar levels and suppresses appetite.
The Next Wave of Obesity Treatments
Denmark's Novo Nordisk and Eli Lilly & Co. have developed groundbreaking drugs for obesity treatment. Novo Nordisk's Ozempic and Eli Lilly's Zepbound, recently approved by the U.S. Food and Drug Administration, have shown promising results. Although these medications are currently only available as injectables, many drug companies are actively working to develop oral versions.
The impact of these drugs on the packaged food industry is still uncertain. As more individuals are prescribed these weight-loss medications, analysts, including the Morgan Stanley equity research team, anticipate a potential erosion of market share for companies that primarily focus on highly calorific processed foods.
To gain a deeper understanding of changing eating habits, Bernstein analysts examined online data in October. They surveyed patients about their food preferences and identified the food companies most at risk. General Mills Inc. and Kellanova, formerly known as Kellogg, were highlighted as the companies with the highest exposure due to their portfolios of carb-focused snacks.
As the frenzy around Ozempic and Wegovy continues, weight-loss drugs are projected to generate an astounding $77 billion in revenue, according to Morgan Stanley's revised forecasts.
While the development of effective obesity treatments is undoubtedly a step in the right direction, it is crucial to remain mindful of potential negative consequences such as eating disorders, medication shortages, and dangerous knockoffs.
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