The introduction of weight-loss drugs is causing people to be more conscious of their calorie intake, resulting in a sales decline for ice cream and crisp manufacturers.
Market Impact: Unilever, PepsiCo, and Nestlé Stocks Dip
As a result of the decreased demand, shares in companies such as Unilever, the maker of Ben & Jerry's ice cream, PepsiCo, the parent company of Walkers crisps, and Nestlé, the producer of Kit-Kat, experienced a decline on the stock market.
Data from the US indicates that individuals using prescription appetite suppressant treatments like Ozempic and Wegovy are already reducing their spending. Walmart, a major retail giant, noted that people using these drugs were purchasing fewer units and consuming slightly fewer calories.
Walmart CEO John Furner stated, "We definitely do see a slight change compared to the total population, we do see a slight pullback in overall basket."
Following Walmart's warning, Unilever shares dropped by as much as two percent, with a slight recovery to £40.30 by the end of the trading day.
Other companies in the food industry, including Kraft Heinz, PepsiCo, and Nestlé, also experienced negative effects, prompting investors to consider the potential impact of weight-loss drugs on the fast-food and confectionery sector.
Industry Response: Kellogg's Arm Remains Vigilant
Steve Cahillane, the CEO of Kellanova, the crisps and snacks arm of Kellogg's, reassured stakeholders that the company is not complacent about the situation. He emphasized that they will thoroughly analyze and, if necessary, mitigate any potential impact on their business.
Rollout Disparity: US Versus UK
The US is significantly ahead in terms of weight-loss drug injections, with approximately nine million prescriptions issued this year. Recent figures suggest that around 15 percent of Americans have already tried these treatments.
Currently, Ozempic is only available in the UK as a prescription medication for individuals with Type 2 diabetes. Wegovy, on the other hand, has been available on the NHS since September for individuals with a body mass index (BMI) over 30. There are approximately 50,000 eligible patients in England.
However, the impact of weight-loss drugs extends beyond healthcare systems. Analysts at Jefferies have proposed that airlines could potentially save millions of pounds if passengers were to lose an average of 10 pounds, as lighter planes would lead to reduced fuel costs.
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