A highly regarded group of weight-loss and diabetes medications is reducing some consumers' appetites – in addition to their grocery spending.
Most individuals who take these drugs, called GLP-1 drugs, say they spend less money on dining out and takeout, in keeping with a Morgan Stanley survey released Tuesday. A smaller proportion of respondents say they lower your expenses after they go to the food market.
The findings add to growing concerns that rising demand for GLP-1 could hurt the underside lines of among the largest restaurant corporations and makers of packaged snacks comparable to Doritos, Oreos and Hershey's Kisses. The GLP-1 include Novo NordiskWegovy, the blockbuster weight reduction injection product, and Ozempic, its diabetes counterpart, together with Eli LillyThe popular weight reduction agent Zepbound and the diabetes injection Mounjaro.
The increasing demand for these 4 drugs shouldn’t be expected to decelerate anytime soon. In the brand new survey, Morgan Stanley analysts expect the marketplace for GLP-1 to be price $105 billion by 2030. They also estimate that 31.5 million people, or about 9% of the U.S. population, can be taking GLP-1 by 2035.
“There is growing evidence that the drugs are having a significant impact on consumer behavior and spending on groceries and restaurants,” Morgan Stanley analysts said within the survey. “All of these dynamics suggest that the impact of GLP-1 drugs will increase across consumer sectors as drug intake increases and the drugs alter the behavior of a demographic that accounts for a disproportionate share of calorie consumption.”
But many food and beverage corporations have done it reassured investors In recent months, it continues to be unclear to what extent these drugs will reduce their income. Morgan Stanley also said within the survey that GLP-1s represent a manageable long-term pressure for restaurants and never an “existential risk.”
“Restaurants provide convenience and/or experience in addition to food, and that will not change with the use of GLP-1,” the analysts said. However, some restaurants may have to adapt to health-conscious consumer behavior, they noted.
Healthier fast-casual restaurants and coffeehouses are higher capable of handle consumers' increasing consumption of GLP-1 cava, Chipotle, Sweet green And Starbuckssaid Morgan Stanley. Domestic service restaurants and more “indulgent” fast-casual restaurants may face greater pressure jack-in-the-box, Wendy's, Wing stop, Shake Shack And Portillos.
Meanwhile, Morgan Stanley sees views Hershey The company is taken into account probably the most at-risk packaged food company given its American consumer-focused snack portfolio. Companies that supply healthy foods should, amongst other things, profit from GLP-1 Important farms, Bellring brands, Simply good foodthe corporate said.
Among beverage corporations, people who produce alcoholic beverages are most in danger. This includes Molson Coors, Boston beer, Constellation marks And Diageosaid Morgan Stanley.
Morgan Stanley conducted a survey in February of 300 consumers currently taking GLP-1 medications. These individuals are “in the early stages of their weight loss journey” but are making significant changes to their food regimen and spending, in keeping with the corporate.
When asked how their monthly spending on dining out has modified since implementing a GLP-1, 63% of consumers said they spend less, 28% said they spend concerning the same amount, and 9% said they might spend more. Meanwhile, 61% said they’re spending less on delivery or takeout from restaurants, 31% said they’re spending concerning the same amount, and eight% said they’re spending more.
Fewer participants said that they had reduced their grocery spending since starting GLP-1: 31% said they spent less, 46% said they spent concerning the same amount, and 23% said they spent less. that they spend more.
The survey also found that individuals tended to remain at the identical restaurant but modified the style of meals they ordered.
When asked whether or not they eat less of the food they ordered in a single go when eating out, 42% of participants answered “always” or “most of the time” and 44% answered “occasionally.” 41 percent said they “always” or “most of the time” order smaller portions of food overall, while 43 percent said they only achieve this sometimes.
Consumers surveyed within the survey reported lower food consumption overall, however the difference is most noticeable for snacks, confectionery, carbonated and sugary drinks, and alcohol, in keeping with the Morgan Stanley survey. About half of individuals reported reducing their consumption of standard sodas, alcohol, and salty snacks by 50% or more since starting weight-loss medications. 22 percent said they might surrender alcohol consumption completely.
Based on these results, Morgan Stanley predicts that consumption of ice cream, cakes, cookies, candy, chocolate, frozen pizza, chips and regular sodas could decline by 4% to five% by 2035. The company also expects consumption to say no by about 3% from alcohol, frozen popcorn or pretzels, crackers, cereal, cheese, chewing gum or mints and energy drinks, amongst others.
Packaged fruit juices, soups, sports drinks, coffee, frozen food regimen meals, tea, cereal and energy bars are among the many foods where consumption is least prone to decline, the corporate said.
Notably, the survey also found that 40% of participants reported smoking traditional cigarettes not less than weekly before starting GLP-1 therapy, but that number dropped to 24% after treatment. Weekly e-cigarette use also fell from 30% to 16% of respondents.
However, Morgan Stanley said it might be cautious about drawing conclusions from the survey concerning the effects of GLP-1 on addictive behaviors comparable to smoking. The company said it’s monitoring ongoing medical research on this area.
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