As the demand for weight management medications continues to reshape eating habits, the diet industry risks being seen as a purveyor of unhealthy foods in this emerging weight loss-focused world.
The growing demand for weight control medications, particularly Ozempic, is not only helping countless individuals shed excess pounds, but it is also noticeably tempering the growth forecasts of the packaged food industry. What is most surprising is the speed at which this transformation is taking place.
Indeed, the food industry is currently analyzing how these drugs could potentially reshape the future of food consumption in Canada, with possible consequences for the way Canadians eat in the years to come.
These pharmaceuticals mimic a hormone that causes the brain to feel full, encouraging people, including those already on treatment for diabetes, to eat less and make more health-oriented food choices.
Originally developed to manage type 2 diabetes, these medications are considered a miraculous solution for weight loss by people actively seeking advice from their health care professionals. Demand for these drugs, driven in part by millions of TikTok users, has led to shortages.
With the exception of Ozempic, very few similar medications that can be taken orally have been approved by Health Canada. Unless individuals are covered by private insurance, the cost of these treatments can range from $600 to $1,000 and more per month.
In 2021, about 29% of Canadian adults aged 18 and older were classified as obese, and another 36% were considered overweight, according to Statistics Canada data. While the prevalence of overweight adults remained relatively stable between 2015 and 2020, there was a notable increase of around three percentage points in the prevalence of obese adults during the same period.
This equates to approximately one-third of the Canadian population struggling with weight-related issues. In light of these statistics, no one will be surprised to learn that interest in these treatments is increasing!
The food industry is starting to realize this development. Recently, a Walmart executive revealed to Bloomberg that the retail giant noticed that people using GLP-1 drugs, like Ozempic, tended to buy fewer groceries than other customers.
PHOTO JOEL SAGET, AGENCE FRANCE-PRESSE ARCHIVES
Semaglutide injector
As a result, Mondelez International, known for its popular snacks like Oreo, Ritz cookies, Nabisco and Toblerone, saw a nearly 8% drop in its shares over the next two days.
PepsiCo also commented on this issue when it published its financial results. Although PepsiCo posted strong financial performance in the recent quarter, it has cast doubt on the prevailing notion of a possible market downturn caused by Ozempic. However, PepsiCo’s traditionally resilient stock has seen a significant decline of nearly 13% over the past six months, reflecting broader sales within the food industry.
Shares of Nestlé, the world’s largest food company, have also fallen 8% over the past six months. These declines have sparked discussions on Wall Street about the implications of the growth of these new weight-loss drugs.
This situation leads us to question ourselves. Is the profitability of the food and snack industry fundamentally linked to a consumer base struggling with excess weight? This question inevitably raises ethical and moral concerns. Impacting their stock prices, these companies risk being seen as purveyors of unhealthy food products if consumers begin to lose weight.
If the “Ozempic phenomenon” were to become a reality, it could pose a significant challenge for product and consumer goods companies. Their task would be to move from simply providing convenient foods to being recognized as solution providers for individuals on a weight loss journey, within a potentially leaner market.
In the early stages of introducing weight loss drugs, factors such as adoption protocols, regulatory hurdles, and associated costs pose a limitation to their widespread use. Only time will tell. However, these drugs cause apprehension among many players in the food industry, and in particular their shareholders.