Speculation About Ripples from Effective Obesity Treatment

Oh my goodness. Wall Street is having waves of panic about the possibility that big food, big burrito, or big dialysis might not be able to keep selling us ever more of their services and stuff. For the last month we’ve been seeing ripples run through the stock market when investors started thinking maybe consumers will be consuming less if enough of them get access to effective obesity treatment.

Cross-Sectional Analysis at Walmart

It started last month as analysts started pondering the economic disruption that might come if enough people have real options for bringing obesity under control. Maybe people will keep eating fast food, but will they really keep devouring ridiculous quantities that restaurants and food marketers are serving up?

Then a Walmart executive reported that his organization is looking at some cross-sectional data on the intersection of Ozempic, Wegovy, and Mounjaro and the market basket of food those customers are buying:

“We definitely do see a slight change compared to the total population, we do see a slight pullback in overall basket. Just less units, slightly less calories.”

So Business insider reported that “food companies are freaking out about Ozempic.”

“We Can Exploit This”

The ripples continued with others explaining the problem away. Portfolio manager Chris Versace had a good point when he said:

“When we see forecasts and expectations like this, they tend to get ahead of themselves, and I think that’s exactly what’s happening here again.”

Nestle CEO Mark Schneider told investors they see an opportunity:

“When you eat less, you have certain needs of vitamins, minerals and supplements. You want to be sure that the weight loss gets supported. You want to be sure that you limit the loss of lean muscle mass.”

So the company is developing “companion products.” Every problem is an opportunity, right?

What if There’s Less Kidney Failure?

In a darkly humorous twist in this Ozem-panic theme, dialysis stocks tanked earlier this month when Novo Nordisk announced they were stopping the FLOW trial of semaglutide in patients with kidney disease because the results were so favorable. So investors imagined that effective obesity treatment will send ripples through the demand for treatment of renal disease. Those stocks have still not recovered.

Speculation Continues

The latest round of this speculation focuses on fast food and fast casual restaurants. Will Americans tire of endless breadsticks and salad at Olive Garden? The hype, spin, and speculation continues.

No, GLP-1 medicines and future generations of treatments that help us cope with obesity will not spell the end of food-fueled capitalism. But it will bring disruption to the current landscape. Though most of the speculation is surely off the mark, we have no doubt that significant shifts will become apparent for many years to come.

Click here, here, and here for further perspective.

Ripples, painting by Arkady Rylov / WikiArt

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October 28, 2023