Big Food vs. Big Pharma: Companies bet on snacking just as weight loss drugs boom


The snack aisle is seen during a tour of a new Amazon Go store in the Capitol Hill neighborhood of Seattle, Washington, U.S., on Monday, Feb. 24, 2020.

Chona Kasinger | Bloomberg | Getty Images

For more than a century, frosted cornflakes have been the backbone of Kellogg’s business. That changes Monday, when the company will spin off its stable cereal business in favor of its faster-growing snack unit and rename itself Kellanova.

The spinoff comes weeks after another wager that consumers will graze between meals, when J.M. Food Investor According Roughly three-quarters of consumers plan to snack every day, according to Accenture data.Millennials and Generation Z consumers are fueling the trend. Kel In These Some patients even report developing aversions to foods with higher sugar and fat content — a category that includes many big snack brands.

More than 9 million prescriptions for these kinds of drugs were written in the U.S. in the fourth quarter of 2022, according to a Trilliant Health report. Morgan Stanley estimates that the number of patients taking GLP-1 drugs could reach 24 million, or nearly 7% of the U.S. population, by 2035.

If so, consumption of baked goods and salty snacks could fall 3% — or even more if the new eating habits of the people using the treatments extend to their broader households and friends, according to Morgan Stanley’s research. That puts companies like Hershey


Mondelez, PepsiCo


General Mills

and Kellogg’s successor Kellanova at risk.But not everyone in the industry agrees with that assessment.Weight loss drug uptake could be slowBoxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes and made by Novo Nordisk, is seen at a Rock Canyon Pharmacy in Provo, Utah, May 29, 2023.George Frey | ReutersAfter buying Hostess Brands, Smucker CEO Mark Smucker defended the future of Twinkies and Ding Dongs against the threat of GLP-1 drugs.“There are multiple ways that consumers will continue to snack. Some That high price has led some insurers to decide not to cover the treatments.While some of the nation’s largest insurers, like CVS’s

Aetna, cover prescriptions of these drugs, the federal Medicare program, many state Medicaid programs and some commercial insurers don’t, leaving patients to pick up the bills themselves.

Another factor could work in the favor of snack sales.

Many of the consumers who eat the most junk food likely won’t be able to afford Wegovy or Ozempic.

“Consumption of indulgent salty snacks that would be considered ‘junk food’ generally over-indexes toward lower-income individuals, who are unlikely to be these drugs’ primary users, ” RBC analyst Nik Modi said in a research note Tuesday.

Modi wrote that he doesn’t believe the drugs will ultimately be problematic for the manufacturers of salty snacks.

What’s more, patients have to inject themselves once a week, and if they stop taking the treatments, their effects disappear, usually erasing any weight loss that had occurred over time.

“This sort of drug is super interesting in what it can do, but I think until it comes in a radically different formulation, in a pill or something like that, and something that has enduring impact and obviously the much lower price point, I think it’s going to be tricky,” said Oliver Wright, senior managing director of Accenture’s consumer goods and services unit.

Even if the drugs become more affordable and are more widely adopted, the change won’t happen overnight. The We ” Big GLP-1 drugs could just put more pressure on companies to update their portfolios.PepsiCo and Mondelez are among the companies that have snapped up smaller brands that make healthier snacks. It