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The following is a guest post by Brian Ratke and Jeremy Bartlow, growth strategy experts at PA Consulting.
GLP-1 drugs (including Wegovy, Mounjaro, Ozempic, etc.) are revolutionizing the fight against type 2 diabetes and obesity. These drugs promise better blood sugar control and significant weight loss. As more people use GLP-1 drugs to manage their health, the U.S. food and beverage industry is feeling the ripples of this tectonic shift in eating and consumption.
Our research The Booming Global Wellness Economy Understand the potential impact that GLP-1 drugs could have on this sector and the potential to reshape the category and consumer behavior in the coming years. These weight loss drugs are on track to create the first trillion-dollar pharmaceutical giant.
Conservative estimates suggest that weight loss drug sales could reach $70 billion by 2035, while some estimates put the figure as high as $200 billion. In 2023, Novo Nordisk’s weight loss drug Wegovy and diabetes drug Ozempic brought in a surprising $33.7 billion, with the U.S. market accounting for 45% of that sales. Demand is soaring as about 40% of U.S. adults are classified as obese. Novo Nordisk expects sales to increase 24% in 2024.
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Permitted by Bryan Radtke
Bottom line? GLP-1 drugs are poised to be game changers. The smart move for brands and businesses is to get ahead of the curve.
New consumer needs
The surge in GLP-1 drug use is expected to dramatically change consumer food preferences and purchasing behavior. Reduced appetite and reduced cravings for high-fat foods may drive demand shifts for new innovative options. Food manufacturers can proactively address these shifts by adjusting their product portfolios, adapting existing products, and aggressively innovating new lines of high-protein, portion-conscious options to meet consumer appetites.
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Courtesy of Jeremy Bartlow
For consumers, the benefits include weight loss, reduced medication use, and improved quality of life. The GLP-1 revolution is also beginning to impact workplace health. 20% of Americans He said he would change jobs to get health insurance coverage for weight-loss drugs, and the potential impact is significant, especially for companies in the U.S. food and beverage sector.
As more consumers use GLP-1 drugs, demand for healthier, smaller portion, higher-protein options is expected to soar. Food manufacturers can’t just see this as a trend. It’s a call to action. GLP-1 users can reduce their daily calories by: Up to 20%That may mean significantly reducing or eliminating snacks altogether.
Product improvements are essential to reduce sugar and calories while increasing nutritional value. A new line of GLP-1-friendly foods will appear on the shelf at eye level. Those who innovate now will have a greater impact. For example, Nestlé recently announced: Launch of a new family of food products called Vital Pursuit, specifically targeting GLP-1 consumers.
Value pressures are already affecting the United States. Fast food and chain restaurantsAnd the rise of GLP-1 drugs is expected to deliver another jolt to the industry’s playbook for calorie-dense options. Of course, traditional “big-box” products will still have a place to play, but as consumers become more health-conscious, there will be a growing appetite for mixing up menus. Think healthier ingredients, smaller portions, and more transparent nutrition information.
Likewise, grocery retailers and convenience stores will experience changes in consumer purchasing patterns as a result of increased use of GLP-1 drugs. There will be increased demand for fresh produce, whole grains, lean proteins, and other nutritious foods. Grocers will need to focus on healthy, prepackaged meals and snacks to target GLP-1 consumers. Convenience stores may also need to rethink their product assortments to include healthier grab-and-go options (fresh fruit, yogurt, salads) as consumers buy fewer prepackaged snacks.
Take action now for a better future
Companies that begin planning today will be best positioned to adapt to changing consumer preferences and the changing market for GLP-1 drugs.
- Look to the future strategically
Scenario planning is not about predicting the future, but rather about determining which decisions will produce the best outcomes across multiple possible futures. Strategic scenario planning assumes multiple outcomes and builds a proactive and adaptive approach that takes into account a range of uncertainties and possibilities. This allows companies to identify opportunities and mitigate risks ranging from minimal disruption to catastrophic disruption, ensuring resilience and sustained growth regardless of the evolving GLP-1 market dynamics.
- Let’s dig into the data
GLP-1 consumers are changing their consumption habits across categories, with the most significant changes occurring in alcohol, sweets, salty snacks, and frozen foods. By studying the consumption habits of GLP-1 users and non-users, companies can identify key product differences. In working with customers, we have found that consumption changes are less related to demographics and more related to individual motivations and new habits surrounding taking GLP-1 medications. Brands that understand these nuances and inform successful, long-term product strategies will be the winners.
- Check out our strategic portfolio edits
Organizations can gain market share by developing high-protein foods that promote satiety and weight management. Restaurants can optimize their menus to meet the nutritional needs and preferences of GLP-1 users. This requires working directly with consumer audiences and retail partners to test and validate ideas to ensure optimization meets changing GLP-1 catalyst needs without alienating key consumers.
- Consider the overall experience
What consumers buy impacts the broader ecosystem, creating new consumer experiences that solve problems rather than sell products. Implementing a holistic customer experience exercise can reveal opportunities to serve GLP-1 consumers and build loyalty. For grocery retailers, this could include new tools that make shopping easier both online and in-store. For restaurants, it could be offering flexible menu options that give GLP-1 consumers the confidence to dine out.
The time for change has come
As GLP-1 drugs gain traction, the U.S. food and beverage sector is at risk of a seismic shift in consumer eating habits and food spending. All companies will need to pivot in some way, and the winners will be those who quickly understand and respond to the impacts, whether positive or negative.
