The Weighty Issue of Weight
The Unintended Consequences of Losing Weight on a Massive Scale
In the ever-evolving market landscape, it's not always the groundbreaking technologies or game-changing business strategies that cause tremors. Sometimes, the catalyst emerges from the least expected quarters. Enter the surging wave of weight-loss drugs, casting its transformative ripples across sectors like food and beverage…and beyond.
In the United States alone, a staggering 70% of the population is classified as either obese or overweight— a percentage that transcends almost any other societal metric. Obesity is a significant risk factor for diabetes, cardiovascular disease, and other clinically significant co-morbidities.
A game-changer that can help the obese come back from all the compounding effects of obesity is an epic game-changer. If it is indeed here to stay, a thinner populace will spark dramatic changes in our society.
Walmart's CEO, John Furner, recently illuminated this shift, noting, "We're witnessing a noticeable pullback in overall basket size." This comment subtly hints at the transformative role drugs like Ozempic are playing in altering consumption habits.
This isn't mere speculation. Tangible evidence reinforces it. Big names like Kraft Heinz, PepsiCo, and Nestlé experienced stock price downturns. Similarly, retail giants Walmart, Target, and Kroger also registered slight declines. And notably, beverage behemoths PepsiCo and Coca-Cola weren't immune either.
But what does this signify? A fleeting fad or a more enduring trend? And how far do its repercussions reach? What are the unintended consequences?
Consumer behavior is the fulcrum on which market trends pivot. As weight-loss drugs garner attention, unhealthy food items—staples in many American diets—are witnessing dwindling demand. Morgan Stanley's recent report underscores this, predicting that the number of patients taking GLP-1 drugs could reach 24 million, or nearly 7% of the U.S. population, by 2035, highlighting potential impacts on grocery sales.
However, versatile markets like Walmart and Target may remain largely unscathed, given their diverse product offerings; people may simply shift their spending from snack food to other items. However, what about restaurants—will they pivot properly? Can they?
Restaurants and Foodservice
Foodservice consultant Brian Hutton suggests that restaurants may weather the gathering storm by tailoring their offerings to appeal to the Ozempic user base. By adjusting plate sizes or introducing smaller side dishes, there's potential to tap into this emerging customer segment.
“Say going to the customer base and saying ‘you're buying ten-and-a-half inch plates—now here’s a nine-inch plate’ may appeal better to the Ozempic customer,” Hutton said. “A smaller side dish may appeal to that customer, or a healthier snack offering or a smaller portion, and it has two unique benefits. (Restaurants) make more money because the portion is smaller, and they're able to appeal to this new (weight-conscious) market.”
The idea isn't to just react but to proactively evolve and find lucrative avenues within perceived challenges.
Listen to my full interview with Hutton here on the PR After Hours show.
Beyond Food & Drinks
Currently, while the limelight is trained on food and beverages, the ripple effects have a much broader reach. The ramifications of this trend aren't confined to just edibles and beverages.
Imagine this: if average passenger weight diminishes by 10 pounds, United Airlines could pocket a neat annual saving of roughly $80 million.
And the implications don't stop there. Could a trimmer populace mean fewer knee replacements or a dip in physical therapy sessions? Might we see alcohol sales dwindling? There is some evidence that drugs like Ozempic and Wegovy diminish cravings for alcohol and smoking.
"There's really been a large number of clinical and anecdotal reports coming in suggesting that people's drinking behaviors are changing and, in some instances, pretty substantially while taking [Ozempic or Wegovy]," says Christian Hendershot, a psychologist and addiction researcher at the University of North Carolina.
He's leading one of six clinical trials now underway aimed at understanding how semaglutide may alter people's drinking and smoking habits.
What about clothing sales? Exercise equipment? Gym memberships? Dating apps? Sex?
There is so much we do not know, but history gives us a clue on ways to think about it.
And what of other unintended consequences? Past market disruptions offer valuable insights.
Take biofuels, for instance.
Introduced as a solution to curtail carbon emissions, they inadvertently triggered a host of challenges, from escalating food prices to ecological concerns. Or consider the unexpected rise of pickleball among seniors, yielding both benefits and issues, ranging from economic gains to noise disturbances.
These episodes drive home a pivotal lesson: Market interventions, while beneficial for specific sectors, can have unintended repercussions on a larger scale.
Reflections on Broader Impacts
The ascendancy of weight-loss drugs presents an intricate web of effects. While the food and beverage realm is in the eye of this storm, the periphery holds countless sectors in its sway. Airlines might see cost reductions, and there might be significant shifts in healthcare demands. As we delve deeper, the complexity of these intertwined consequences becomes evident, offering a goldmine of insights for keen observers and stakeholders.
As the business landscape adjusts, those nimble enough to adapt and innovate will rise to the top. Whether it's amazing weight loss drugs, the biofuel evolution, or the pickleball surge, all serve as a potent reminder: in the business arena, adaptability reigns.