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Nearly 7% of the population is projected to be on weight-loss drugs in 2035

You just started taking Ozempic. Will you still crave that bag of potato chips?

Big food companies and investors are watching as Ozempic and other similar weight-loss drugs flow to millions of people, upending America’s diet industry and raising new questions about how consumers will eat.

Executives at food manufacturers from Campbell Soup CPB 1.06%increase; green up pointing triangle to Conagra Brands CAG 0.00%increase; green up pointing triangle said they are fielding questions from investors about the drugs’ potential impact, as internal teams start to assess consumer behavior and brainstorm ways to respond.

The drugs, which suppress patients’ appetites, have exploded in popularity in the U.S., straining manufacturing capacity. Morgan Stanley has projected that 24 million people, or nearly 7% of the U.S. population, will be taking such medications in 2035.

Those people could cut their daily calorie consumption by as much as 30%, according to the firm, which surveyed over 300 patients. For a person on a 2,000-calorie diet, that could mean eliminating a one-ounce bag of salted potato chips, a bottle of soda and more each day.

Carolyn MacBain-Waldo said she is eating significantly less since she started taking Eli Lilly’s Mounjaro—her family orders from restaurants less often and their grocery bills have dropped by as much as 20%. The 50-year-old, who works as a senior director in retail, said the drug makes her feel full more quickly and that she is far less likely to overeat when stressed.

“I still have a fully stocked kitchen, there’s chips and pretzels in there,” MacBain-Waldo said. “I don’t find it tempting.”

Mark Clouse, chief executive of Campbell, which along with its namesake soups makes Goldfish crackers and Cape Cod potato chips, said he has been struck by the rapid rise of pharmaceutical companies behind the drugs.

“That’s a little bit of an ‘OK, wait a minute, something is going on here,’” Clouse said. Still, he said, he doesn’t buy the idea that the drugs will cut into food sales across the board.

Wall Street has been trying to project the drugs’ impact on sales for food and beverage makers, restaurants and grocery stores. Among food companies, snack and candy manufacturers such as Hershey HSY 0.88%increase; green up pointing triangle, Mondelez, Hostess TWNK 0.03%increase; green up pointing triangleand Campbell might be the most exposed, as patients cut back most on foods that are high in sugar and fat such as cookies and salty snacks, Morgan Stanley said. A Bernstein report said goods such as candy, where about one-third of sales are to people who consume the products at least once a day, could be most at risk.

Karyn Carlton, 47, who takes Mounjaro, said she doesn’t think about food all the time anymore and eats far fewer snacks.

“The other day I had a single jelly bean, which is unheard of for me,” she said, adding that she also recently ordered a kids’ meal from a fast-food restaurant and felt satiated.

The women said their doctors didn’t recommend specific diets while taking the drug.

The rise of Ozempic and other weight-loss drugs comes as sales growth is slowing for big food companies as consumers begin to balk at higher prices. Sales roared for food companies as consumers stocked pantries with major brands during the Covid-19 pandemic, and paid more for groceries when inflation took hold.

Now, concerns about companies’ growth prospects in the age of Ozempic are adding to worries over declining sales volumes, increasing pressure on food companies’ stock prices. The S&P 500 Packaged Food & Meat subindex has dropped 14% so far this year, while the S&P 500 has climbed 11%.

Nicholas Fereday, executive director of food and consumer trends for agricultural lender Rabobank, said the drugs pose a new threat to the packaged-food industry’s growth.

“If two-thirds of Americans are the target audience, it’s a huge thing,” Fereday said, referring to the portion of the U.S. population that is considered overweight.

Some Wall Street analysts and food-industry consultants said they don’t view Ozempic, made by Novo Nordisk, and other weight-loss drugs as a big risk for now. The drugs remain expensive and inaccessible to many Americans, they said, and widespread or long-term adoption isn’t guaranteed, with some people experiencing unpleasant side effects such as nausea and diarrhea. It is also still unclear which foods patients may opt to eat while taking the drugs, they said.

Many food executives said the drugs have gotten their attention, but that after navigating previous trends, from low-fat to low-carb diets, they aren’t panicking.

Conagra CEO Sean Connolly said that any significant drop in calorie consumption due to the drugs is a long way off. If they do gain traction, Connolly said, food companies could respond with new products, including smaller packaging sizes.

“Snacking tends to be one of the most profitable businesses in food,” Connolly said, and among the fastest-growing. “It’s not necessarily bad news.”

Bob Nolan, Conagra’s senior vice president of demand science, said his team began studying Ozempic and other drugs last fall. He said consumers aren’t discussing them on social media as much as other weight-loss programs such as the keto diet, though that could change once the drugs become available in pill form instead of as injections.

If patients are consuming fewer calories, Nolan said, they will turn to higher quality food, such as Conagra’s Healthy Choice and Marie Callender’s frozen meals, and Birds Eye frozen vegetables. “We have lots of products that will fit this already, but we’ll design new ones if we don’t,” he said.

Mondelez said it is expanding its “portion control” snacks, which are 200 calories or less and individually wrapped. The company also offers products such as gluten-free Oreos and Hu paleo-friendly chocolate bars for specific dietary needs. Campbell’s Clouse said it is too early to determine whether overall food consumption will decline as a result of the drugs, and that previous changes to American diets have created both challenges and opportunities.

Morgan Stanley’s survey found that patients taking weight-loss drugs ate more fruits, vegetables, poultry and fish, as well as weight-management products such as protein bars and nutritional shakes. The bank said packaged-food companies could adapt by changing their offerings.

MacBain-Waldo said she craves foods such as french fries less since starting Mounjaro, and eats more salads and protein. “I want to make sure I’m putting the right things in,” she said.

Mark Smucker, chief executive of Smucker, which recently agreed to pay $4.6 billion to acquire Twinkies maker Hostess, said the company is monitoring research on weight-loss drugs. “At this point, I still just feel very bullish that that sweet sort of instant reward that some folks are seeking is never really going to go away,” he said.

Responding to analysts’ questions in June, executives at Simply Good Foods Co., the maker of Atkins-branded food products, said the drugs are driving renewed interest in weight management and bringing consumers into pharmacies where its products are also sold. They said the company plans to market Atkins products to people who are on the drugs and are seeking more nutritious calories, as well as to patients coming off them, who are trying to keep weight off.

Geoff Tanner, who took over as Simply Good’s CEO in July, said the company had already begun work to find patients and market products directly to them.

“We think this is a wave and we’re going to catch it,” he said.