A new diet drug from Novo Nordisk and Eli Lilly could cause major changes in the U.S. food industry.Data released by Walmart shows that people who use diet pills have reduced food intake, and the first to be affected is the fast food industry. On Friday, the stocks of several major fast food chains and food companies all fell, underperforming the broader market. McDonald's fell more than 1.2%, Wal-Mart fell nearly 2.6%, and Costco fell 2.3%.
The popular weight-loss drugs affect the health of many patients and have also made several pharmaceutical companies shine in the financial market this year. In fact, its impact is wider than these. The latest market awareness is that the food industry, including Wal-Mart, has also been affected, as diet pills have impacted food demand and drug-addicted customers are eating less and less.
Novo Nordisk (NVO) and Eli Lilly (LLY) have launched two new weight-loss drugs called GLP-1 receptor agonists, Ozempic and Wegovy, which are said to be expected to help patients lose 20% of their weight and can also reduce their risk of heart attack or stroke. They are considered to be the most effective and safest weight-loss drugs in history, with more and more users. However, the popularity of diet pills will undoubtedly lead to reduced food intake, especially jeopardizing the fast food industry, which has high calorie content.
Financial blog ZeroHedge analyzed that these two drugs may trigger a catering revolution in the United States, pointing out that the American food industry, which is lying in its comfort zone, is too lazy to seek change, and believes that Americans' obsession with fast food, burgers and other carbohydrate junk food will not change. The total value of the U.S. food industry is currently nearly US$1 trillion, and any small change will cause a huge shock to the industry.
Morgan Stanley predicts that the two diet pills may lead to a reduction of up to 1.7% in calorie consumption in the United States in the next 11 years. By then, up to 8% of the population in the United States will be taking diet pills.
Unsurprisingly, Dalmore found that high-carbohydrate foods such as fast food and pizza, as well as candies, snacks, salty snacks, high-sugar drinks and snacks, are most affected by diet pills.
Moreover, retail giant Walmart also issued a warning not long ago, saying that consumers who are taking Ozempic, Wegovy and other weight loss pills have reduced shopping demand. John Furner, CEO of Walmart U.S., said, “We confirm that consumers who are taking medications do shop slightly less, shop slightly less, and consume slightly fewer calories than the overall population.”
Walmart also compared consumers who purchased the drugs at its pharmacies with those who did not, and found that the former purchased less food.
Ozempic and Wegovy are available at Walmart pharmacies. Data shows that sales of these two drugs will increase by 300% from 2020 to 2022. Wal-Mart CEO Doug McMilon said in August this year that the popularity of Novo Nordisk and Eli Lilly's weight-loss drugs has helped Wal-Mart's revenue, but it is obviously not conducive to the consumption of high-calorie fast food. He predicts that sales of daily consumables such as food, as well as health care products driven by the popularity of weight loss pills, can still grow by 1% in the second half of the year.
The stocks of several major fast food chains and food companies fell during the session on the 6th local time. Among them, McDonald's (MCD) fell by more than 1.2%, Parkson Group (YUM) fell by more than 1.5%, and Kellogg's (K) fell by more than 2.5%. Among several major retailers, Wal-Mart (WMT) fell by nearly 2.6%, Costco (COST) fell by 2.3%, and Walgreens (WBA) fell by more than 1.4%. In contrast, manufacturers of weight-loss drugs surged, with Novo Nordisk (NVO) rising more than 2.7% and Eli Lilly (LLY) rising more than 3.3%.
Although more and more company executives and investors are beginning to discuss how the popularity of diet pills will change the U.S. economy and business environment, many CEOs are still looking forward to the prospect of obese people in the United States consuming junk food.
Earlier this week, Steve Cahullane, chief executive of snack company Kellanova, which was spun off from Kellogg's, said the company was studying the potential impact of changes in eating habits; he said the use of diet pills is still in a very early stage, "but like all other factors that affect the business, we will pay attention to it and study it, and if possible, we will try to reduce the impact."
He also said that for Kellanova, a pragmatic approach may be to increase penetration in the United States and other markets at the same time to find consumers who are interested in snack products and can build a certain brand loyalty.