NEW YORK, N.Y. (Reuters) — Packaged food makers and fast-food restaurants may be forced to overhaul more of their products next year as 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.
The U.S. Food and Drug Administration approved Novo Nordisk’s Wegovy GLP-1 pill late last month, sending shares of food companies down. Eli Lilly’s rival medication is expected to gain approval from regulators next year.
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Changing consumer demands
Food companies are already dealing with shifts in consumer tastes toward higher protein and smaller portions due to the popularity of weight-loss injections, and analysts believe widespread GLP-1 adoption could mean long-term changes in demand.
To cope, businesses are promoting products with more protein, tweaking labelling 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, liquour, soda, drinks and bakery snacks, and more focused on protein and fibre, so we expect food companies and also restaurants to cater to this audience that is growing,” said JP Frossard, consumer foods analyst at Rabobank.
“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,” he said.
New pill a ‘groundbreaking’ step
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,” he said.
Some 40 per cent of American adults are obese, U.S. government data shows, and around 12 per cent of adults say they currently take GLP-1 drugs, according to a poll published last month by health policy research organization KFF.
Weight loss meds impact spending
Households using GLP-1 medications cut spending at grocery stores by 5.3 per cent and fast-food restaurants by about eight per cent on average, according to a Cornell Research study published last month that used purchase data collected by Numerator from about 150,000 households.
Those reductions largely faded when households stopped using the medication.
“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 longer.
While the Cornell study found modest increases to spending only in a handful of categories such as yogurt and fresh fruit, companies are taking note.
Marketing shifts
Earlier this year, Conagra started labelling some of its Healthy Choice frozen meals with high protein and fibre 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 labelling in May and work with grocers 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.
Fast-casual Mexican chain Chipotle recently added a “high protein menu” that features, among other items, a single cup of chicken or steak.
In recent months, some restaurant chains 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.”
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