Packaged food makers and fast-food restaurants could be forced to overhaul more of their products next year as newly approved GLP-1 appetite suppressant pills become available in January, analysts said.
More Americans are expected to try medications in pill form rather than injection because the medication will be cheaper and many patients are hesitant to inject it.
The US Food and Drug Administration approved Novo Nordisk’s vaccine. On Monday, the Wegovy GLP-1 pill caused shares of food companies to fall on Tuesday. Eli Lilly’s rival drug is expected to win regulatory approval next year.
Food companies including Conagra Brands and Nestle said they were already grappling with shifts in consumer tastes toward higher amounts of protein and smaller portions due to the popularity of weight-loss shots, and analysts believe widespread adoption of GLP-1 could mean long-term shifts in demand.
To address this problem, companies are promoting products with more protein, changing labeling to indicate that they meet the GLP-1 standard, and working with large retailers to better market their products.
“We are seeing that people are reducing their consumption specifically of salty snacks, spirits, soft drinks, beverages and pastries, and are focusing more on protein and fibre, so we expect food companies and also restaurants to cater to this growing audience,” said JP Frossard, consumer food analyst at Rabobank.
“We will see greater access to those medicines and a broader potential market for products that take into account the needs of the GLP-1 user,” he said.
Andrew Rocco, stock strategist at Zacks Investment Research, called the approval of Novo “groundbreaking,” as the pill would be cheaper than the injectable version of Wegovy and offer the same weight loss results. “High protein, smaller portions and innovation in functional foods will be necessary,” he said.
FOOD COMPANIES ARE TAKING NOTE
About 40% of American adults are obese, U.S. government data shows, and about 12% of adults say they currently take GLP-1 medications, according to a survey released last month by the health policy research organization KFF.
Households using GLP-1 drugs reduced spending at supermarkets by 5.3% and at fast food restaurants by 8% on average, according to a Cornell Research study published last week that used purchasing data collected by Numerator from about 150,000 households.
Those reductions largely disappeared when households stopped using the drug.
“The declines we observed will likely be seen in a much broader segment of the population” thanks to weight-loss pills, said Sylvia Hristakeva, one of the study’s co-authors. He added that the lower price and ease of use of the pills will also make it likely that people will use the medication for longer.
While the Cornell study found modest increases in spending in only a handful of categories, such as yogurt and fresh fruit, companies are taking notice.
Earlier this year, Conagra began labeling some of its high-protein, high-fiber Healthy Choice frozen meals as “GLP-1 compliant.” A spokesperson said these meals are selling faster than competing products that include similar claims on their packaging. The company plans to introduce new Healthy Choice recipes with the same labeling in May and collaborate with supermarkets such as Walmart and Kroger to market them, the spokesperson said.
With information from Reuters.
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