The following is a guest post from Bryan Radtke and Jeremy Bartlow, growth strategy experts at PA Consulting.
GLP-1 drugs — including Wegovy, Mounjaro, Ozempic and others — are revolutionizing the fight against Type 2 diabetes and obesity. These medications promise better blood sugar control and significant weight loss. With more people using GLP-1 drugs to manage their health, the U.S. food and beverage sector is feeling the tremors of a seismic shift in eating habits and consumption.
Our research into the booming global wellness economy identifies the potential impacts of GLP-1 drugs on the sector and their potential to reshape categories and consumer behaviors for years to come. Looking ahead, these weight loss drugs are on track to create the first trillion-dollar pharma giants.
Conservative projections estimate weight loss drug sales could reach $70 billion by 2035, while some estimates soar to $200 billion. In 2023, Novo Nordisk’s weight loss drug Wegovy and diabetes treatment Ozempic brought in an astounding $33.7 billion alone, with the U.S. market contributing 45% of those sales. With around 40% of American adults classed as obese, demand is rocketing — Novo Nordisk anticipates a 24% sales increase in 2024.
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The bottom line? GLP-1 drugs are positioned to be game-changers. The smart move for brands and businesses is to stay ahead of the curve.
A new consumer appetite
The surge in GLP-1 drug usage is set to dramatically reshape consumer food preferences and purchasing behaviors. Reduced appetite and diminished cravings for high-fat foods may spark a shift in demand toward new, innovative options. Food manufacturers can preempt the shift by adapting their product portfolios, tweaking existing products and aggressively innovating new lines of high-protein, portion-conscious options to sate consumer appetites.
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For consumers, the benefits include shedding pounds, reducing medication use and a better quality of life. The GLP-1 revolution is even beginning to impact workplace wellness, with 20% of Americans saying they would change jobs to gain medical insurance coverage for weight loss drugs. For businesses, especially in the U.S. food and beverage sector, the potential implications are significant.
As more consumers turn to GLP-1 drugs, the demand for healthier, smaller-portioned and high-protein options is set to surge. Food manufacturers can’t just observe this as a trend; it’s a call to action. GLP-1 users could cut daily calories by as much as 20%, which could mean greatly reducing or eliminating snack foods altogether.
Reformulating products to reduce sugar and calories while boosting nutritional value will be essential. New lines of GLP-1 friendly foods will rise to eye-level shelf space. Those who innovate now will have greater influence. For example, Nestle recently announced the launch of a new line of food products called Vital Pursuit, specifically targeting GLP-1 consumers.
Value pressures are already impacting U.S. fast food and chain restaurants, and the rise of GLP-1 drugs is set to throw yet another wrench into the industry’s playbook of calorie-dense options. Traditional “super-sized” offerings will still have a role, of course, but as consumers become more health-conscious, the heat will be on to mix up the menu — think healthier ingredients, smaller portions and transparent nutritional info.
Similarly, grocery retailers and convenience stores will experience changes in consumer purchasing patterns from increased GLP-1 drug usage. There will be greater demand for fresh produce, whole grains, lean proteins and other nutritious food. Grocery retailers will need to focus on healthy, pre-packaged meals and snacks to cater to GLP-1 consumers. Additionally, convenience stores may need to rethink their product assortments to include healthier grab-and-go options (fresh fruit, yogurt, salads) as fewer consumers pick up pre-packaged snacks.
Take action now to feed a better future
Companies that start planning today will be best positioned to adapt to changing consumer preferences and market shifts from GLP-1 drug usage.
- Look ahead strategically
Scenario planning isn’t about predicting the future, but rather determining which decisions will register the best outcomes across several possible futures. Strategic scenario planning hypothesizes different outcomes, considering a range of uncertainties and possibilities to build proactive, adaptive approaches. This allows companies to identify opportunities and mitigate risks from minimal to massive disruption, ensuring resilience and sustained growth regardless of evolving GLP-1 market dynamics.
- 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 meals. By studying the consumption habits of GLP-1 users and non-users, companies can identify key product differences. In our work with clients, we’ve found consumption shifts are less about the demographics and more about the individual motivations and new habits that surround taking GLP-1 drugs. The winners will be the brands that understand these nuances to inform successful, long-term product strategies.
- Explore strategic portfolio edits
Organizations can attract market share by developing high-protein foods that promote satiety and weight management. Restaurants can optimize menus to align with the nutritional needs and preferences of GLP-1 users. This will require working directly with consumer audiences and retail partners to test and validate ideas, ensuring optimization meets changing GLP-1-catalyzed needs without alienating core consumers.
- Consider the whole experience
What consumers buy impacts a wider ecosystem, sparking new consumer experiences that solve problems rather than sell products. Conducting a total customer experience exercise can flag opportunities to serve GLP-1 consumers and build loyalty. For grocery retailers, this might include new tools for easier shopping, both online and in-store. For restaurants, this might be providing flexible menu options that give GLP-1 users the confidence to dine out.
Ripe for change
As GLP-1 drugs gain traction, the U.S. food and beverage sector is on the brink of a seismic shift in consumer eating habits and food spending. All businesses will need to pivot in some form, with the winners understanding and responding to the impacts quickly — both positive and negative.
