A food delivery messenger carries a takeout bag outside aSweetgreen on September 14, 2023 in Manhattan.
Gina Moon | Washington Post | Getty Images
The findings add to concerns that a surge in demand for GLP-1 could hurt the bottom line of some large restaurant companies and manufacturers of packaged snacks such as Doritos, Oreos and Hershey’s Kisses. . GLP-1 includes Eli Lilly’s popular weight loss treatment Zepbound and diabetes injection Mounjaro, as well as Novo Nordisk’s blockbuster weight loss injection Wegovy and diabetes drug Ozempic.
The increased demand for these four drugs is not expected to ease anytime soon. In a new study, Morgan Stanley analysts said they expect the GLP-1 market to be worth $105 billion by 2030. They also estimate that by 2035, 31.5 million people, or about 9% of the U.S. population, will be taking GLP-1.
“There is growing evidence that drugs have a significant impact on consumer behavior and spending on groceries and restaurants,” Morgan Stanley analysts said in a study. “All of these moves reflect the growing impact of GLP-1 drugs across the consumer sector as drug intake increases and drugs reshape the behavior of demographic groups that account for a disproportionate share of calorie consumption. suggests that.”
However, many food and beverage companies reassure investors Over the past few months, it’s still unclear how much these drugs will reduce revenue. Morgan Stanley also said in its research that GLP-1 is a long-term pressure on restaurants, not an “existential risk” and one that can be managed.
“Restaurants offer convenience and experiences in addition to food, and the use of GLP-1 does not change that,” the analysts said. But some restaurants may need to adapt to health-conscious consumer behavior, they noted.
Healthier fast-casual restaurants and coffees, such as Cava, Chipotle, Sweetgreen and Starbucks, are better positioned to address increased consumer use of GLP-1, Morgan Stanley said. Domestic service restaurants and “more upscale” fast-casual restaurants, such as Jack in the Box, Wendy’s, Wingstop, Shake Shack and Portillo’s, could come under additional pressure.
Meanwhile, Morgan Stanley views Hershey as the most at risk of packaged food companies, given its portfolio of snack products focused on U.S. consumers. Health food companies such as Vital Farms, Bellring Brands and Simply Good Foods should benefit from GLP-1, the company said.
Among beverage companies, those that produce alcoholic beverages are at the highest risk. Those include Molson Coors, Boston Beer, Constellation Brands and Diageo, Morgan Stanley said.
A box of Wegoby manufactured by Novo Nordisk is seen at a pharmacy in London, UK on March 8, 2024.
Holly Adams | Reuters
In February, Morgan Stanley conducted a survey of 300 consumers currently taking GLP-1 drugs. The company says these people are “in the early stages of their weight loss journey” but have made significant changes to their eating habits and spending.
When asked how their monthly spending on eating out at restaurants has changed since the start of GLP-1, 63% of consumers said they spent less, 28% said they spent about the same amount, and 9% said they spent the same amount. answered that their spending had decreased. Spend more. Meanwhile, 61% said they spent less on restaurant delivery or takeout, 31% said they spent about the same amount, and 8% said they spent more.
Fewer participants reported spending less on groceries since starting GLP-1: 31% said they spent less, 46% said they spent about the same amount, and 23% said they spent more.
The study also found that people continue to go to the same restaurant, but tend to change the type of food they order.
When asked whether they order a small amount of food at a time when eating out, 42% of participants answered “always” or “most of the time,” and 44% answered “sometimes.” Forty-one percent said they “always” or “most of the time” order smaller portions of food overall, while 43% said they only occasionally.
According to the Morgan Stanley study, consumers surveyed reported a decrease in food consumption overall, but the difference was most pronounced in snacks, confectionery, carbonated and sugary drinks, It was alcohol. Approximately half of the people reported that they had reduced their intake of regular soda, alcohol, and salty snacks by more than 50% since they started taking weight loss drugs. 22% reported having completely stopped drinking alcohol.
Based on these results, Morgan Stanley predicts that consumption of ice cream, cake, cookies, candy, chocolate, frozen pizza, potato chips, and regular soda could decline by 4% to 5% by 2035. I predict that there will be. The company also expects consumption to fall by about 3%. Alcohol, frozen popcorn or pretzels, crackers, cereal, cheese, gum, mints, energy drinks, etc.
According to the company, prepackaged fruit juices, soups, sports drinks, coffee, frozen diet foods, tea, granola and energy bars are among the foods that have seen the least decline in consumption.
Of note, the study found that 40% of participants reported smoking traditional cigarettes at least weekly before starting GLP-1, but that number decreased to 24% after treatment. It was also revealed. Weekly e-cigarette use similarly decreased from 30% of respondents to 16% of respondents.
However, Morgan Stanley said it was cautious about drawing conclusions from the study about GLP-1’s impact on addictive behaviors such as smoking. The company said it is monitoring ongoing medical research in this area.
