The U.S. Food and Drug Administration approved
Novo Nordisk's Wegovy GLP-1 pill on Monday, sending shares of food
companies down on Tuesday.
Packaged food makers and fast-food restaurants are going to be forced to overhaul more of their products next year as the newly
approved, appetite-suppressing GLP-1 pills become available in January,
analysts say.
More Americans are expected to try the drugs as a
pill rather than as a shot because the medication will be cheaper and
many patients are hesitant to inject themselves.
Eli Lilly's rival pill form medication is expected to
gain approval from regulators in 2026.
Food Companies Will Be Forced To Make Changes
Major food brands including Conagra Brands and
Nestle are already dealing with shifts in consumer tastes toward higher
protein and smaller portions.
This trend change is due to the popularity of weight-loss
injections. Analysts believe widespread GLP-1 adoption could mean
long-term changes in demand.
To cope, businesses are promoting products with
more protein, tweaking labeling to say they are GLP-1 friendly and
working with large retailers to better market products.
"We are seeing people cut (back) specifically on
salty snacks, liquor, soda, drinks, and bakery snacks, and more focused
on protein and fiber." said JP Frossard, consumer
foods analyst at Rabobank.
Frossard added, "We expect food companies and also restaurants
to cater to this audience that is growing,"
"We'll see more access to those drugs and a higher
addressable market for products that have in mind the needs of the
GLP-1 user," they said.
Novo's Groundbreaking Pill
Andrew Rocco, stock strategist at Zacks Investment
Research, called Novo's approval "groundbreaking" because the pill
would be cheaper than the injectable version of Wegovy and deliver the
same weight-loss metrics.
"High protein, smaller portions, and
functional food innovation will be necessary," Rocco said.
Some 40% of American adults are obese, U.S.
government data shows, and around 12% of adults say they currently take
GLP-1 drugs, according to a poll published last month by health policy
research organization KFF.
Households using GLP-1 medications cut spending at
grocery stores by 5.3% and fast-food restaurants by about 8% on
average.
This was according to a Cornell Research study published last week that
used purchase data collected by Numerator from about 150,000 households.
Those reductions largely faded when households stopped using the medication.
Grocery Store And Fast Food Spending Is Declining
"The decreases we saw will likely show up in a
much broader slice of the population" because of weight-loss pills, said
Sylvia Hristakeva, one of the study's co-authors.
She said the cheaper
price and ease of use of pills will also make it likely that people use
the medication for much longer.
While the Cornell study found modest increases to
spending only in a handful of categories like yogurt and fresh fruit,
companies are taking note.
GLP-1 Friendly Foods
Earlier this year, Conagra started labeling some
of its Healthy Choice frozen meals with high protein and fiber as "GLP-1
friendly." A spokesperson said those meals are selling faster than
rival products making similar claims on their packaging.
The company
plans to introduce new Healthy Choice recipes with the same labeling in
May and work with grocers like Walmart and Kroger to market them, the
spokesperson said.
French dairy company Danone, which makes Oikos
Greek yogurt, said in a statement that it is seeing double-digit growth
in its high-protein offerings, a trend that has accelerated with the
adoption of GLP-1 medications.
Nestle, the world's biggest food company, has also
introduced new frozen meals that cater specifically to GLP-1 users,
called Vital Pursuit. The Swiss company did not respond to a request for
comment.
Fast-casual Mexican chain Chipotle on Tuesday
added a "High Protein Menu" that features, among other items, a single
cup of chicken or steak.
In recent months, some restaurant chains including Olive Garden have added menu items for smaller, cheaper portions.
Noodles & Company marketing head Stephen
Kennedy said such menu additions were about offering guests "options
that satisfy without going overboard."
This story was reported by Jessica DiNapoli and Waylon
Cunningham in New York, Savyata Mishra in Bengaluru; Editing by
Sayantani Ghosh and Jamie Freed) at Reuters.