Weight-loss pill approval set to accelerate food industry product overhauls

Jessica DiNapoli and Waylon Cunningham

NEW YORK, Dec 24 (Reuters) – Packaged food makers and fast food restaurants may be forced to reconsider much of their products next year as newly approved GLP-1 appetite suppressant pills become available in January, analysts say.

More Americans are expected to try these drugs in pill form rather than injections because the drugs will be cheaper and many patients are hesitant to give themselves injections.

The U.S. Food and Drug Administration approved Novo Nordisk's Wegovy GLP-1 tablet on Monday, sending food stocks tumbling on Tuesday. Eli Lilly's rival drug is expected to receive regulatory approval next year.

Food companies including Conagra Brands and Nestle are already facing shifting consumer tastes toward more protein and smaller portions due to the popularity of weight-loss injections, and analysts say widespread adoption of GLP-1 could mean long-term shifts in demand.

To combat this problem, companies are promoting higher protein foods, adjusting labeling to indicate they are GLP-1 compliant, and working with large retailers to improve the quality of products in the marketplace.

“We're seeing people cutting back on salty snacks, liquor, sodas, beverages and baked snacks and focusing more on protein and fiber, so we expect food companies as well as restaurants to cater to this growing audience,” said JP Frossard, consumer food analyst at Rabobank.

“We will see greater access to these drugs and a larger market for products that address the needs of GLP-1 users,” he said.

Andrew Rocco, equity strategist at Zacks Investment Research, called Novo's approval “groundbreaking” because the pill will be cheaper than the injectable version of Wegovy and provide the same weight loss benefits. “Higher protein portions, smaller portion sizes and functional food innovations will be needed,” he said.

FOOD COMPANIES TAKE ATTENTION

About 40% of American adults are obese, according to the U.S. government, and about 12% of adults say they currently take GLP-1 drugs, according to a survey released last month by health policy research organization KFF.

Households using GLP-1 medications cut spending at grocery stores by 5.3% and at fast food restaurants by an average of about 8%, according to a Cornell Research study released last week that used purchasing data collected by Numerator from about 150,000 households.

These reductions largely disappeared when households stopped using the drug.

“The reductions we observed are likely to show up in a much wider portion of the population” due to diet pills, said Silvia Hristokeva, one of the study's co-authors. She said the pills' lower price and ease of use would also make people more likely to use the drugs for longer.

While the Cornell study found modest increases in spending in only a few categories, such as yogurt and fresh fruit, companies are taking note.

Earlier this year, Conagra began labeling some of its Healthy Choice frozen meals, which are high in protein and fiber, as “GLP-1 safe.” The spokesperson said the meals are selling faster than competing products that make similar claims on their packaging. The company plans to introduce new Healthy Choice recipes with the same labeling in May and work with grocery stores like Walmart and Kroger to promote them, a spokesperson said.

French dairy company Danone, which makes Oikos Greek yoghurt, said in a statement that it “is seeing double-digit growth in the supply of high-protein products, a trend that has accelerated with the introduction of GLP-1 products.”

Nestle, the world's largest food company, also introduced new frozen meals specifically designed for GLP-1 users called Vital Pursuit. The Swiss company did not respond to a request for comment.

Mexican fast food chain Chipotle on Tuesday added a “High Protein Menu” that includes one cup of chicken or steak, among other items.

In recent months, some restaurant chains, including Olive Garden, have added menu items designed for smaller, cheaper portions.

Noodles & Company chief marketing officer Stephen Kennedy said such menu additions aim to offer guests “options that are satisfying without going overboard.”

(Reporting by Jessica DiNapoli and Waylon Cunningham in New York, Savyata Mishra in Bengaluru; Editing by Sayantani Ghosh and Jamie Freed)