Economic transformation could be spearheaded by weight-loss drugs - smart investments to make today
The explosion of weight-loss drugs is set to turn the food industry on its head, as these medications transform our eating habits and preferences. Consultant interventional cardiologist Ali Khavandi cautions that being overweight is more than just a cosmetic issue; it's a serious health threat [1].
In the United States, over 40% of adults are classed as obese, leading to a "health crisis" due to increased healthcare costs and reduced productivity in the workforce [1]. The consequences don't stop there— even military recruitment is impacted, making weight loss a major concern for governments [1].
Yet, there's reason to hope. Governments around the world are stepping up efforts to promote healthy eating, and the latest generation of weight-loss medications is proving to be astonishingly effective [1]. These drugs, like semaglutide (sold as Ozempic and Wegovy), work by mimicking gut hormones that trigger feelings of fullness, leading to reduced appetites and calorie intake [1].
These drugs have already begun to make an impact, with restaurant owners noticing a change in diners' ordering habits—people are opting for smaller portions [1]. Investment specialist at Mirabaud Group, John Plassard, calls these drugs "game changers" [1].
Despite their promise, there are some concerns. Khavandi highlights that we don't yet know the long-term effects and side-effects of these drugs [1]. Still, most people seem to stick with them, as they trigger a virtuous cycle of weight loss, improved energy, and fewer joint pains [1]. As health systems expand treatment eligibility and innovate to reduce side-effects, the use of these drugs is only set to rise.
Interestingly, the drugs don't just impact the amount of food we eat but also change the quality of our food choices [1]. A study by Walmart revealed that stores with pharmacies saw smaller, healthier food baskets passing through the tills [1]. This suggests that people on weight-loss drugs may be shifting away from junk food and toward healthier options.
Governments are taking notice, stepping up the pressure on the food industry to improve the quality of food [1]. In the UK, initiatives are underway to reduce the amount of sugar, salt, and junk food in products, as well as to crack down on junk food advertising [1]. The US lags behind, but the push from weight-loss drugs may help speed up these much-needed changes.
Other studies support the idea that weight-loss drugs are having a noticeable impact at the checkout [1]. Low-income households, in particular, are said to see a reduction in grocery spending when using these drugs [1]. They spend less on chips, sweet baked goods, soft drinks, and frozen food [1].
All of these trends could provide opportunities for food companies that specialize in healthy, nutrient-dense foods. Companies like Danone, known for their yogurt products, could benefit from the increased demand for soothing, protein-rich foods [1]. Alternative milk companies might also see growth, as more people opt for plant-based milk options [1].
Yet, this shift presents challenges for junk-food producers. The rise of weight-loss drugs, combined with growing consumer awareness of health and wellness, suggests a decline in the demand for unhealthy foods. However, some companies are moving with the times, pivoting their offerings to cater to health-conscious consumers [1]. Premium and craft drinks brands, as well as alcohol-free options, are thriving [1].
The increasing popularity of vegetarian and vegan diets among younger consumers is another trend reshaping the industry [1]. Companies like Danone, BellRing Brands, and Kerry Group could benefit from the need to reformulate and redesign food products to work alongside weight-loss medications [1].
Overall, we're witnessing a fundamental transformation of the food and drinks industry, as consumer preferences shift, governments regulate, and innovations in weight-loss drugs and food technology converge [1]. Those resistant to change risk obsolescence, but smart companies that adapt are set to thrive.
References:1 https://www.conomist.com/pay-wall/economist-essentials/2023/04/23/the-drug-war-on-obesity
- John Plassard, the investment specialist at Mirabaud Group, labels the new generation of weight-loss drugs as "game changers" in the personal finance sector, due to their potential impact on healthcare costs associated with obesity.
- As the use of weight-loss drugs rises and governments push for healthier food options, companies specializing in health-and-wellness products and nutrient-dense foods may reap benefits, such as Danone with their yogurt products.
- The shift towards healthier food choices driven by weight-loss drugs and consumer awareness of health and wellness presents challenges for junk-food producers, but some are adapting to cater to health-conscious consumers, with premium and craft drinks brands, as well as alcohol-free options, thriving.
