Swimming Against a GLP-1 Tide in the Snack Industry
A sea change in what people want to buy. This is what food companies that depend on making money from chips and other snacks are seeing. Some brush it off as consumers becoming more “value-conscious” in the face of economic uncertainty. But others are getting to work on figuring out how to cope as they find themselves swimming against the tide in a snack industry feeling pressure from rising GLP-1 use by formerly heavy users of their brands.
Snack Food Sales Are Down
One thing is pretty clear. Snack food sales are down. Pepsico, a giant of the snacking industry, recently reported a four percent drop in its Frito-Lay snacking business. That’s more than the 3.5% drop in its beverage division, which is also under pressure.
A similar story emerged from the Campbell Soup Company, which owns those iconic Pepperidge Farm Goldfish crackers. Earnings from snacks dropped by seven percent in the company’s third fiscal quarter. CEO Mark Clouse expressed confidence in the long-term outlook for his snacking business, but warned that the category will remain under pressure right now.
Likewise, McDonald’s reports that consumers are cutting back on fast food.
Accepting Change and Responding
It is hard to know what the future will hold for snacking. Some executives seem to think their present situation is just a blip that will go away when the economic mood improves. But it is possible that they are in the first stage of grief over losing an old way doing business. That stage is called denial.
Others are in the business of adapting. Mattson is a food development business focused on understanding how consumer tastes are changing and helping food companies adapt. Mattson’s chief innovation and marketing officer told Marketplace that the change in consumer behaviors brought by GLP-1s is very real:
“You have to understand that a consumer who might have been able to eat a 4-ounce portion of snack is now looking for a 1½-ounce portion.
“We do hear people saying, ‘I’m still missing the crunchy.’ But the crunchy they want to get is from apples or they want to get it from cucumbers or carrots. I mean, that’s like a sea change.”
People Are Not Going Back
The other end of the stages of grief is acceptance. Sooner or later the whole food industry will get there because people who have the option of overcoming obesity are not going back to old patterns of behavior if they can help it. Cindy, a 43-year-old dental hygienist using a GLP-1 told Marketplace:
“I don’t mindlessly eat anymore. If I do want something that might be not a good food, I might have a bite of cake, and that’s it. I don’t need more of it. I don’t need another slice.”
Jo-Ann McArthur, president of Nourish Food Marketing in Toronto, nicely sums up the influence of GLP-1s on the industry:
“It’s not going away. I think we’re just going to see more and more acceptance, and everybody in the food industry is going to have to do some scenario planning around this.”
People adapt, life goes on.
Click here for more from Marketplace, here for more from the National Post, and here for a report on these trends from Dalhousie University Agri-Food Analytics Lab. For perspective from behavioral economics, click here.
Goldfish in a Fish, photograph by Ted Kyle / ConscienHealth
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August 15, 2024
