Popular use of obesity drugs like Ozempic could change consumer habits
More Americanslike Ozempic and Wegovy, which suppress appetites, and some kinds of consumption too. But the hunger suppressors also have the potential to boost demand for healthier foods and activities like going to the gym.
Enough people are now taking the drugs that major food retailers say they have already seen the trend take a bite out of consumption.
“We definitely do see a slight change compared to the total population, we do see a slight pullback in overall basket,” Walmart U.S. CEO John Furner told Bloomberg this month. “Just less units, slightly less calories.”
Morgan Stanley Research analysts estimate in a recent report that 24 million people, or 7% of the U.S. population, will be using the drugs by 2035. Given the anticipated widespread adoption, corporations are examining their own exposure to loss because of the drugs.
Reduced demand for “high-fat” options
“The food, beverage and restaurant industries could see softer demand, particularly for unhealthier foods and high-fat, sweet and salty options,” Morgan Stanley tobacco and packaged food analyst Pamela Kaufman said in the report on the impact of obesity medications on consumer demand and the food ecosystem.
Given the newness of the drugs, any impact on consumer spending will likely be minimal in the immediate-to-near future, according to the report.
“We acknowledge that the impact in the near term is likely to be limited given drug adoption will grow gradually over time, but we could see a longer-term impact as drug prevalence increases,” Kaufman said in a note. “Moreover, we expect companies to adapt to changes in consumer behavior through innovation and portfolio reshaping efforts.”
Increased adoption of weight loss drugs will likely shift demand patterns, as opposed to universally suppress consumption.
“Conceivably, it might reduce demand for some kinds of food but increase demand for other kinds of foods,” Columbia Business School Professor of Healthcare Management Frank Lichtenberg told CBS MoneyWatch. “There could be an offsetting effect.”
Ability to rebrand
If food preferences shift substantially, companies can change menu options or even rebrand to cater to consumer tastes over time.
“If this was going to come in two to three years, it would be harder to adapt to. If it’s over a decade, companies can shift what items they offer,” Morgan Stanley analyst Brian Harbour told CBS MoneyWatch.
Restaurants’ appeal also extends beyond the food items they serve.
“Restaurants don’t sell just food. They sell convenience in the case of fast food, or service in full-service restaurants, and that element isn’t going away. That’s why this is not an existential risk for these concepts,” Harbour added. “You may have to shift the menu over time. It may be a taller task for a company tailored to a specific product, like a pizza chain.”
Reduced demand for health care?
If more people start eating healthier, weight loss drugs could lead to reduced stain on the health care system overtime.
“It seems like the most immediate impact would be on food and also health care,” Lichtenberg said. “If it causes weight loss and improved health, gradually this could reduce demand for health care and so that’s a possible consequence of this as well.”
Ozempic and others in booming class of so-called GLP-1 agonist medications, however, have been linked to
Could be a plus for gyms, fitness centers
Increased gym and fitness center usage could also occur in tandem with adoption of the drugs.
Morgan Stanley Research analysts found that respondents to a survey exercised more after they started taking anti-obesity medications. The percent of respondents who said they exercised weekly doubled from 35% pre-medication to 71% after.
Harbour explained the relationship between the drugs and exercise, saying in a research note, “… perhaps as patients lose weight, they simply feel both more physically able and more mentally motivated to exercise more to compound the benefits they are seeing from weight loss medications.”
In that scenario, gym chains would be a beneficiary, according to his analysis.
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