ORLANDO, FLA. — What the full impact of GLP-1 medications will be on food and beverage consumption patterns is impossible to know. Use of the medications today is limited and there is much to learn about usage patterns and the nutritional needs of the consumers taking the medications. But company chief executive officers are charged with being prepared and developing strategies for potentially disruptive trends.
During the CAGNY Conference that took place Feb. 18-21, Food Business News had the opportunity to discuss the topic with Sean Connolly, president and CEO of Conagra Brands, Inc., Chicago; and Dirk Van de Put, chairman and CEO of Mondelez International, Inc., Chicago.
Both are watching the trend but don’t see it as being as disruptive as others have predicted.
“What we see is 10 years down the road it would have an effect on our volume of 1% to 1.5%,” Van de Put said. “It’s very small.”
He also predicted the “evolution” of the trend will be slow.
“It will not be overnight,” he said. “I don’t think the drugs will be available to everybody. I don’t think insurance will cover it.
“The evolution will be slow, and we will have time to react to it like we have had to deal with a lot of different things like trans fats. We’ll adapt. It’s doable. We would have to refocus our R&D resources, but we can do that.”
Connolly looked back five years, and referenced the excitement around plant-based meat alternatives and the speculation they would take share from conventional meat processors.
“Back in 1997 I worked on Olestra and people thought that was going to take over,” he said. “I’ve seen these phenomena come and go.”
Van de Put said Mondelez developed a GLP-1-specific model that is updated quarterly with the percentage of consumers on the drugs, how long they stay on the medication, what foods they are eating and not eating, and how “comfortable” the consumers using the medications are with them. He noted that during the last two quarters the “penetration” of the drugs has decreased even though there is more manufacturing capacity to produce the medications.
“The other thing we see is that 80% of the consumers regain 80% of the weight back,” he said. “After they get off the drugs, they start eating like they did before. The theory is they will all start eating healthier but that’s only 10% (of users). The other 90% eat like they have eaten before, only less of it.”
Connelly said that if GLP-1 usage becomes ubiquitous a shift food and beverage manufacturers may see is for users to eat “purposely.”
“They are going to eat differently,” he said. “Purposely, they are going to be obsessed with getting protein. The majority of weight loss is muscle mass. So, protein-centric solutions will be mission critical.
“Portion will be critical, because if you are on a GLP-1 and the portion is too large you will feel queasy and you don’t want to feel that way.”
Van de Put said smaller portions is where he sees Mondelez capitalizing on the trend “in a perfect world.” But, he added, he doesn’t think the usage of GLP-1s on Mondelez will be significant, because 75% of the company’s business is outside of the United States.
“I think the market where GLP-1s will be the biggest is in the US,” he said. “Forty percent of our business is in emerging markets where I don’t think GLP-1s will be embraced. From a geographical point we will be less affected, I would say.”
The bulk of Conagra Brands’ sales are in North America and Connolly said he chooses to see GLP-1s as an opportunity for his company.
“… The one constant in food CPG is change,” he said. “Consumers are constantly changing. Especially around health and wellness, they are constantly changing. Our job as manufacturers and consumerists is to monitor those changes and design products those consumers are looking for.
“That’s what we do. That is the centerpiece of our economic engine. It’s already happening. As we build out our innovation pipeline, we have some things that are more speculative than others. We will design around these attributes and innovate like crazy.”
A report published by TD Cowen shortly after the CAGNY Conference concluded said CPG companies may be underestimating the structural impact of GLP-1 usage.
“We continue to view rising GLP-1 usage as a significant factor in the acceleration of fresh meat and produce’s growth rate around the perimeter of the store and stagnation in the center store and frozen aisles,” the report said.