Businesses are getting worried about weight loss drugs

Diabetes-turned-weight-loss medications like Ozempic, Wegovy, and Mounjaro—collectively known as GLP-1 drugs—may be shrinking more than just celebs’ waistlines. 

Driving the news: A growing number of companies are worried that mass adoption of the drugs, which work by suppressing people’s desire to eat and drink, will be bad for their bottom line and could lead to a general drop in consumption. 

  • Snack food company Kellanova, formerly Kellogg, says it’s preparing for the possibility of a downturn in the snack market as a result of GLP-1 users feeling less peckish.

  • The head of Walmart’s US operations said the company has seen a “slight pullback” in food-buying among people on GLP-1s.

  • A Barclays report warned that GLP-1s pose a serious risk to the business models of companies ranging from PepsiCo to McDonald’s to cigarette-maker Altria Group.

Why it matters: 5 million prescriptions for GLP-1s were written in the US last year, and Morgan Stanley expects 7% of Americans to be on the drugs by 2035. That’s a lot of people, and If the drugs do significantly change their consumption habits, some of the world’s largest companies could see demand for their products—be they Belmonts or Butterfingers—dry up.

  • In Canada, spending on Ozempic alone surged by more than 1,500% between 2019 and 2021.

Zoom out: There is early, anecdotal evidence that GLP-1s might cause people to cut back on more than just snacking. Some users have reported a decline in a range of addictive behaviours, from biting nails to shopping to scrolling social media. 

  • Researchers have speculated that the drugs might rewire the brain’s reward mechanisms in a way that makes addictive behaviour less pleasurable.

Bottom line: If GLP-1s do make consumption generally less appealing, it’s not just snack businesses that will need to worry about slumping sales.—TS