Written by:
Anđela Martinović, PhD, together with Gali Artzi, PhD, Eva Everloo, Nurit Ben, & Taire Brown
The Rise of GLP-1
Just a few short years ago, the term ‘GLP-1’ or ‘Ozempic’ would have meant little to the average person. Today, it’s a frequent topic of conversation and media coverage. GLP-1 (glucagon-like peptide 1) is a receptor agonist, a class of drugs originally designed to treat type 2 diabetes, with brand names such as Ozempic, Wegovy, and Mounjaro. These medications have seen an explosion in sales with the approval and off-label use for weight loss, typically resulting in a reduction in body weight of 15-21% when combined with nutrition and exercise.
Currently, 70% of the GLP-1 market is in the US and partially the EU, with a staggering 300% growth from 2020 to 2023 in prescriptions within the US alone. This rapid rate of adoption has resulted in record profits for pharmaceutical companies like Novo Nordisk and Eli Lilly. In concrete numbers, this means that 1 in 8 American adults has been estimated to have tried the drug to date.
Amid this surge, Novo Nordisk, the company behind GLP-1 drugs Ozempic and Wegovy, has experienced a remarkable rise in its stock price, from roughly $50 per share in 2022 to upwards of $142 in June 2024. This financial boost emphasizes strong market confidence and the growing demand for these medications. Novo Nordisk’s success is a testament to the transformative impact GLP-1 drugs are having on health, food consumption, and overall market dynamics.
“GLP-1 as a trend has grown by 1054% in social discussion over the past year”, according to Tastewise, a GenAI-powered consumer data platform (see graph below). By collecting data from sources like social media, reviews, menus, and recipes, Tastewise provides food companies with accurate insights into evolving food trends and consumer behavior, helping them enhance product-market fit.
So where is this all heading? Projections from UBS and Morgan Stanley suggest that the obesity drug market could reach $126 billion in sales by 2029 – a CAGR of 30%. The increasing prevalence of obesity worldwide and its associated pressure on healthcare systems, along with the reputation of GLP-1 drugs for inducing significant weight loss (approximately 15–25+%, significantly higher than previous generations of obesity drugs), are driving GLP-1 drug expansion into new markets like China. China, with its strong demand and growth potential, is projected to see an annual growth rate of 23% from 2023 to 2033. This rapid expansion suggests that the global adoption of GLP-1 drugs shows no signs of slowing down, and this is truly a blockbuster hit.
GLP-1 and the Food Industry: Challenges & Opportunities
Although positive for the consumer from the weight loss perspective, the full implications of GLP-1 drugs are yet to be seen. Analysts are already predicting that GLP-1 drugs will significantly impact the $9 trillion food industry in terms of both food quantity – consumers desiring less – and quality – consumers desiring a higher quality of food. As more people incorporate these medications into their daily routines, a noticeable shift in food consumption patterns has already been observed.
A recent Barclays Research report highlights two interesting findings: consumer shopping baskets are shrinking in size with an estimated reduction of 10% and spending on packaged foods has dropped significantly, by approximately 40%. Further zooming into the impacts of GLP-1 on food consumption, a Morgan Stanley Research report provides interesting early insights on how GLP-1 users’ eating habits are changing (see figure below). According to their survey, individuals taking GLP-1 drugs for weight loss show a significantly larger reduction in their consumption of snacks, sugary drinks, baked goods, and confectionary compared to non GLP-1 users. Additionally, these patients report an increased intake of whole foods such as fruit, vegetables, legumes, poultry, and fish.
Food and beverage category impact by GLP-1 users
Source: AlphaWise survey, Morgan Stanley Research
Beyond food groups, the impact of GLP-1 is also influencing consumer packaged goods (CPGs) and ingredient companies. A recent Barclays Research report showed that CPG companies might reduce portion sizes, which could lower the total volume sold but still allow companies to charge more per unit. For example, a company could introduce smaller, premium-priced packages to maintain profitability. Conversely, ingredient suppliers whose volumes are more linearly linked to ingredient growth, could be adversely affected by reduced portion sizes, as their sales depend more heavily on the quantity of ingredients sold.
Opportunities for Ingredient Companies
The GLP-1 trend presents significant opportunities for ingredient and food supplement companies, particularly those producing natural GLP-1 inducers such as prebiotic fibers, berberine, resveratrol, curcumin, and ginseng. These natural inducers can offer valuable support to users, non-users, and potential users in several ways:
- Before Medication: They can enhance the body’s natural production and secretion of GLP-1, helping to prepare individuals before starting GLP-1 medications. This may improve overall metabolic health, enhance drug efficacy, and reduce potential side effects.
- During Medication: They may help alleviate some common side effects of GLP-1 medications, such as digestive issues, dizziness, headaches, and fatigue. Additionally, they offer benefits like improved metabolism, cardiovascular health, and kidney health.
- After Discontinuation: They have shown promise in potentially substituting some of the medication’s effects. While they may not achieve the same level of weight loss typically seen with GLP-1 medications, they provide a convenient and cost-effective alternative that does not require a prescription. These inducers can help individuals transition away from GLP-1 medications while maintaining effective weight and glucose level management.
For individuals who are not using GLP-1 medications due to reasons such as gastrointestinal side effects, high costs, or limited insurance coverage, natural GLP-1 inducers may offer a viable alternative. This presents a valuable opportunity for ingredient companies to contribute significantly to the evolving landscape of weight management and health enhancement by integrating nutraceuticals into more packaged goods. However, it is important to note that further research and high-quality clinical trials are needed to establish the true efficacy of natural GLP-1 inducers and to determine if their effectiveness is comparable to that of GLP-1 drugs.
Opportunities for CPG Companies
Not only is there an overall pursuit of healthier foods, but the appetite-suppressing effects of GLP-1 drugs are expected to result in a 2.5% decrease in food consumption in the US. Large CPG companies like Nestlé see this trend as an opportunity to develop new, nutrient-rich, healthier ‘companion GLP-1 products.’ In May 2024, Nestlé launched its first GLP-1 companion brand, Vital Pursuit, which consists of portion-aligned foods high in protein and essential nutrients.
Nestlé is not the only brand responding to consumer demand. Currently, there are high-protein foods on the market designed to prevent mass muscle loss as people lose weight. Additionally, products aimed at avoiding or limiting weight rebound after therapy are set to hit the market by next year. PepsiCo and Mondelez International are closely monitoring the situation and have yet to reveal related products. However, they are focusing on the trend towards healthier eating by offering products lower in sugar and salt and turning to smaller packaging.
Opportunities for Retail
With the shift in consumer behaviors due to GLP-1 drugs, there has been a significant impact on purchasing patterns, thus influencing retailers.
John Furner, Walmart US CEO, observed, “We definitely do see a slight change compared to the total population; we do see a slight pullback in overall basket.”
To remain competitive, retailers are adopting several strategies:
- Expanding health-focused product ranges: Increasing offerings of high-protein, high-fiber, organic foods, and low-calorie options. This includes larger deli sections for prepared fresh proteins and healthy salads and spreads.
- Innovating product offerings: Introducing meal kits, pre-packaged healthy meals, and “mini” versions of snacks with clearly defined serving sizes. These options help GLP-1 users track their calorie intake more effectively, which can aid in weight management.
- Collaborating on innovative packaging solutions: Partnering with companies and startups that provide innovative packaging solutions, that prioritize shelf-life extension and food safety. This caters to the demand for fresh and whole foods that are nutritious and healthier, which are also often more perishable.
- Creating dedicated in-store sections: Providing specific areas for GLP-1 friendly products, making it easier for customers to find suitable options.
- Utilizing advanced platforms for demand prediction and inventory management: Implementing software solutions to enhance demand prediction and inventory management, ensuring responsiveness to changing consumer behaviors.
Further, to adapt to the consumer changed behavior, retailers can:
- Leverage loyalty programs: Attract GLP-1 users and health-conscious consumers by offering tailored rewards, exclusive discounts, and personalized recommendations.
- Offer in-store consultations with nutritionists: Provide personalized advice on GLP-1 friendly products through in-store consultations with nutritionists. This can help customers make informed choices and effectively manage their diets.
Opportunities for Foodservice
Shifting away from retailers, the foodservice sector is also strongly challenged by changing consumer diets, which often rely on high-calorie menu offerings. According to a Morgan Stanley Research survey:
“70% of the consumers indicated a significant or moderate change to eating behaviors eating more at home vs at restaurants, changing the choice of food when eating out and eating smaller meals.”
McDonald’s, the world’s largest fast-food chain, claims that it has not yet seen an impact on their business due to GLP-1 drugs, but acknowledges that future impact is uncertain. Food service operators and restaurants might benefit from expanding their menu options, emphasizing nutritional details, and promoting well-balanced meals to cater to the changing preferences of consumers using GLP-1 medications. They could also explore packaging innovations aimed at prolonging food freshness and offering smaller portion sizes, particularly for takeout or packaged foods.
Zooming back out, the table below illustrates the possible impact of the GLP-1 movement on different actors across the food supply chain, highlighting the challenges and opportunities it creates for them.
GLP-1 and the Future of Nutrition: Innovations in AI and Tech
Outside of retail, in today’s AI and digital era, the impact of GLP-1 extends to businesses integrating digital solutions into nutrition and health. This presents significant opportunities for telehealth businesses as well, including those:
- Using GLP-1 recommendations as a strategy to connect subscriber-members with clinicians (as recently done by Weight Watchers),
- Incorporating GLP-1 companion foods or Natural GLP-1 inducers into (personalized) nutrition and health digitalized businesses,
- Combining GLP-1 with wearable devices to enhance personalization and improve disease prevention and management.
For example, the synergy between GLP-1 and continuous glucose monitoring (CGM) devices is expected to significantly improve diabetes management and disease prevention. AI screening platforms that test the effects of different GLP-like ingredients on health are also emerging. These platforms help create personalized supplements that meet specific health needs.
The PeakBridge Long View
- The rise of GLP-1 can be viewed as a positive trend in terms of its net benefit to a healthier global population. This shift has spurred new research, innovation, and the creation of healthier and nutritional products.
- The ultimate impact of the GLP-1 trend is still unfolding, but it is a powerful driver for shifting consumer behavior towards healthier options. GLP-1 medications encourage better eating habits, promote portion control, and reduce overeating, all of which help decrease food waste.
- Startups must recognize this trend and adapt their strategies accordingly. AI can play a crucial role in product development, ensuring that products meet future consumer demands.
- The anticipated off-patent status of GLP-1 drugs within the next decade will furthermore allow for cheaper generic versions, making these medications more affordable and accessible. This creates significant opportunities for companies to develop companion products that support GLP-1 use and enhance health outcomes.
- In the food value chain, ingredient companies, CPG companies, retailers, and food service operators must adapt to changing consumer behavior driven by the GLP-1 trend. In the immediate future, the food industry will remain resilient, and companies will find ways to seize new opportunities. These include leveraging natural GLP-1 inducers, offering reduced portion sizes, developing GLP-1 companion products, and expanding menu and shelf options to meet evolving consumer demands.
- Looking ahead, as the GLP-1 class of drugs continues to improve and side effects decrease, there is a potential future where many people incorporate a GLP-1 derivative into their daily routine. This drug, which curbs appetite, decreases cravings, and guides consumers toward healthier nutritional options, could lead to a radical shift in the entire food ecosystem, from farm to shelf to fork.
In summary, GLP-1 medications are a pivotal advancement, reinforcing preventative health and the food-as-medicine movement. This marks a significant step towards a more proactive, preventive, and holistic approach to health.
Further reading: