Could Emerging Weight Loss Drugs Signal the End of Processed Food?

Novo Nordisk’s rapid rise as Europe’s largest company has largely been attributed to its ground-breaking drug, Semaglutide, which is the active ingredient in Ozempic, Novo Nordisk’s diabetes medication, and its weight loss medication, Wegovy.

The drug works by mimicking the hormone the body produces when food is eaten, meaning that users do not crave the kinds of high calorie foods that one tends to when hungry. As reported by Grocery Dopio, users of these medications tend to spend 11% less on groceries than they otherwise would, cutting back on packaged junk food in particular. Morgan Stanley predicts that by 2035, the US will see a 3-6% decline in demand for ice cream, chocolate, crisps and fizzy drinks attributable solely to weight loss drugs.

These damning predictions don’t seem to have disrupted deal flow in the food and drinks sector, however. Mars still plans to acquire Kellanova for $36 billion.

So why aren’t the food giants panicking? The reason is likely due to the cost of the drug. Currently, Wegovy costs around £200 per month, meaning that only relatively affluent consumers in developed nations have access to it. Since an increasing portion of the packaged food market is in developing nations, Mars appears to believe that the decline in Western demand will be outweighed by demand in emerging markets where the drug is unlikely to see widespread use until well into the future. Therefore, there is little reason to be sceptical about the future of the packaged food and beverage sector, even amongst producers of high calorie foods.

Smaller food and beverage companies, lacking the resources to expand into emerging markets, may feel the impact of reduced demand for high-calorie foods more acutely. As consumers in developed nations cut back on junk food, these companies may struggle to maintain revenue. Without the ability to offset losses through global expansion or pivot quickly to healthier products, smaller players in the industry could face significant financial challenges.