A food delivery driver carries a takeout bag outside aSweetgreen in Manhattan on September 14, 2023.
Jeenah Moon | The Washington Post | Getty Images
A very popular group of weight-loss and diabetes medications is reducing some consumers’ appetites – as well as their food spending.
Most people who take these drugs, called GLP-1 drugs, say they spend less money on dining out and takeout, according to a Morgan Stanley survey released Tuesday. A smaller proportion of respondents say they save money when they go to the grocery store.
The findings add to growing concerns that rising demand for GLP-1 could hurt the bottom lines of some of the largest restaurant companies and makers of packaged snacks such as Doritos, Oreos and Hershey’s Kisses. The GLP-1 include Novo NordiskWegovy, the blockbuster weight loss injection product, and Ozempic, its diabetes counterpart, along with Eli LillyThe popular weight loss agent Zepbound and the diabetes injection Mounjaro.
The increasing demand for these four drugs is not expected to slow down anytime soon. In the new survey, Morgan Stanley analysts expect the market for GLP-1 to be worth $105 billion by 2030. They also estimate that 31.5 million people, or about 9% of the U.S. population, will be taking GLP-1 by 2035.
“There is growing evidence that the drugs are having a significant impact on consumer behavior and spending on groceries and restaurants,” Morgan Stanley analysts said in the survey. “All of these dynamics suggest that the impact of GLP-1 drugs will increase across consumer sectors as drug intake increases and the drugs alter the behavior of a demographic that accounts for a disproportionate share of calorie consumption.”
But many food and beverage companies have reassured investors in recent months that it’s still unclear how much these drugs will eat into their revenue. Morgan Stanley also said in the survey that GLP-1s represent a manageable long-term pressure for restaurants and not an “existential risk.”
“Restaurants provide convenience and/or experience in addition to food, and that will not change with the use of GLP-1,” the analysts said. However, some restaurants may need to adapt to health-conscious consumer behavior, they noted.
Healthier fast-casual restaurants and coffeehouses are better able to handle consumers’ increasing consumption of GLP-1 cava, Chipotle, Sweet green And Starbuckssaid Morgan Stanley. Domestic service restaurants and more “indulgent” fast-casual restaurants could face greater pressure, among others jack-in-the-box, Wendy’s, Wing stop, Shake Shack And Portillos.
Meanwhile, Morgan Stanley sees views Hershey The company is considered the most at-risk packaged food company given its American consumer-focused snack portfolio. Companies that offer healthy foods should, among other things, benefit from GLP-1 Important farms, Bellring brands, Simply good foodthe company said.
Among beverage companies, those that produce alcoholic beverages are most at risk. This includes Molson Coors, Boston beer, Constellation marks And Diageosaid Morgan Stanley.
Boxes of Novo Nordisk’s Wegovy are seen at a pharmacy in London, Britain, March 8, 2024.
Hollie Adams | Reuters
Morgan Stanley conducted a survey in February of 300 consumers currently taking GLP-1 medications. These people are “in the early stages of their weight loss journey” but are making significant changes to their diet and spending, according to the company.
When asked how their monthly spending on dining out has changed since implementing a GLP-1, 63% of consumers said they are spending less, 28% said they are spending about the same amount, and 9% said they are spending less that this is the case spend more. Meanwhile, 61% said they are spending less on delivery or takeout from restaurants, 31% said they are spending about the same amount, and 8% said they are spending more.
Fewer participants said they had reduced their grocery spending since starting GLP-1: 31% said they spent less, 46% said they spent about the same amount, and 23% said they spent less. that they spend more.
The survey also found that people tended to stay at the same restaurant but changed the type of meals they ordered.
When asked whether they eat less of the food they ordered in one go when eating out, 42% of participants answered “always” or “most of the time” and 44% answered “occasionally.” 41 percent said they “always” or “most of the time” order smaller portions of food overall, while 43 percent said they only do so sometimes.
Consumers surveyed in the survey reported lower food consumption overall, but the difference is most noticeable for snacks, confectionery, carbonated and sugary drinks, and alcohol, according to the Morgan Stanley survey. About half of people reported reducing their consumption of regular sodas, alcohol, and salty snacks by 50% or more since starting weight-loss medications. 22 percent said they would give up alcohol consumption completely.
Based on these results, Morgan Stanley predicts that consumption of ice cream, cakes, cookies, candy, chocolate, frozen pizza, chips and regular sodas could decline by 4% to 5% by 2035. The company also expects consumption to decline by about 3% from alcohol, frozen popcorn or pretzels, crackers, cereal, cheese, chewing gum or mints and energy drinks, among others.
Packaged fruit juices, soups, sports drinks, coffee, frozen diet meals, tea, cereal and energy bars are among the foods where consumption is least likely to decline, the company said.
Notably, the survey also found that 40% of participants reported smoking traditional cigarettes at least weekly before starting GLP-1 therapy, but that number dropped to 24% after treatment. Weekly e-cigarette use also fell from 30% to 16% of respondents.
However, Morgan Stanley said it would be cautious about drawing conclusions from the survey about the effects of GLP-1 on addictive behaviors such as smoking. The company said it is monitoring ongoing medical research in this area.
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2024-04-20 12:00:01
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