Earlier this month, Walmart, the largest chain retailer in the United States, warned that some consumers had reduced shopping demand after taking GLP-1 receptor agonist weight loss drugs. The most famous weight loss drug currently is Wegovy, developed and produced by the Danish pharmaceutical manufacturer Novo Nordisk. After taking it, it can lower blood sugar levels,
At the time, John Foner, CEO of Walmart U.S., said, “We confirm that compared to the overall population, consumers who are taking medication do shop slightly less, shop slightly less, and consume slightly fewer calories.”
In addition, more and more giants who control business data have begun to express their opinions. The widespread use of drugs such as Wegovy has indeed begun to have an impact on the food consumption market, which once triggered the selling of the stocks of companies such as Nestlé, Coca-Cola, and PepsiCo.
However, some investors are beginning to believe that the market's previous pessimistic reaction may have been overdone and that now may be an opportunity to buy food stocks on the dip. Aviva portfolio manager Richard Saldanha said, "People are subjectively extrapolating changes in long-term consumption habits, which I feel is a bit excessive."
At present, Wegovy has achieved partial success in the United States and is being promoted in some European markets such as Norway, Denmark, and Germany. Kiran Aziz, head of responsible investment at KLP, Norway's largest pension fund, said that Novo Nordisk's breakthrough is bound to bring major changes, not only to food and beverages, but also to other health-related stocks.
It is understood that KLP also holds shares in Novo Nordisk and a number of food companies. Aziz added that investors should pay more attention to the impact of supermarkets, which have lower profit margins and where weight loss drugs may have a greater impact on their profitability.
Last week, Nestlé CEO Mark Schneider revealed that it is developing a series of auxiliary products to be used with weight-loss drugs. "When you're eating less, there's definitely a need for vitamins, minerals and other supplements," he says. "You want the weight loss process to be supported and to limit muscle loss."
Schneider also mentioned that such products used in conjunction with weight loss pills can also be used to ensure that the weight does not regain weight. All in all, weight loss drugs currently have no impact on Nestle's performance. Even if the negative impact appears in the future, it will be offset by new opportunities.
It can be expected that with the help of these measures, some investors have begun to believe that the long-term damage to the industry from the "miracle weight loss drug" may be limited. In addition, limited availability and high prices of these drugs may mean limited coverage.
Arda Ural, an Ernst & Young executive, pointed out that lower economic status groups have a higher risk of obesity than higher economic status groups, but the cost of these drugs will be a limiting factor for them.
John Plassard, an expert at the investment institution Mirabaud Group, believes that companies with higher risks in the stock market may be companies that only produce "junk food" or chain restaurants that do not have many alternative foods.
Brian Frank, portfolio manager of the FrankValue fund, said he would consider increasing his holdings of stocks affected by Wegovy. "If the market is willing to give me a discount, I will be happy to accept it."
My Nguyen, a research analyst at Legal & General Investment Management America, said the craze for weight-loss drugs appears to be led by the United States, "but elsewhere, such as emerging countries, is still in the process of transitioning to snacks."