Is the food industry really in trouble?

I keep repeating: the food industry is in trouble.

People are eating le.

Eating less is bad for business.

Why are food sales down?

• RFK Jr says the food industry is poisoning America
• Concerns about ultra-processed foods are reducing sales of the most profitable products.
• GLP-1 drugs encourage users to eat less.
• Inflation is raising the cost of food.

Here is one example of what’s happening to food companies:

• Walmart same-store sales slowdown could portend trouble for packaged food brands:  Walmart’s results offer a window into an increasingly value-conscious consumer, with implications for food prices, brand strategy and retail competition well beyond its store… Read more

Cuts to SNAP also affect the grocery industry.

• Grocery volume declines deepen as SNAP cuts reshape shopper behavior:  As tighter SNAP eligibility reduces food-assistance participation, shoppers are shifting toward staples, value brands and lower-priced retailers, which is putting new pressure on grocery sales… Read more

But the biggest factor is the GLP-1 drugs.

GLP-1 drugs put $73B in global food value at risk, report finds: PepsiCo’s Lay’s is the most exposed food brand, with Doritos, Hershey’s, Cheetos, Kellogg’s and Reese’s also vulnerable, Brand Finance determined.

For Food Companies, Shifts From GLP-1 Use Are Hard to Digest: People on medications for weight loss are buying less food, shrinking their portion sizes and purchasing smaller clothes. Businesses are trying to adjust.

But the drugs slow digestion, leading people to eat fewer calories a day. They are often instructed by physicians to consume more protein to protect muscles and more fiber to offset gastrointestinal issues that can sometimes result.

So consumers aren’t just eating less when on the medications, they’re eating differently, moving away from breads and pastas and toward more meats and vegetables.

The food industry is scrambling to keep up:

Big Food’s Big Reset: Why the industry’s changing faster than ever:  From C-suite shake-ups to targeted acquisitions, Big Food is rethinking how to win in a rapidly changing market… Read more

Already, sales of alcohol, chips, ice cream and sodas have taken a hit from consumers on the medications…Analysts at J.P. Morgan predict that as GLP-1 treatments proliferate spending on food and beverage industry revenues could fall by as much as $55 billion by 2030. Food companies, facing declining sales, are racing to develop products they hope will appeal to those customers.

As researchers Luc L. Hagenaars and Laura A. Schmidt write in Science, (Un)intended consequences of mass-prescribing GLP-1s

The food industry has a long-demonstrated capacity to turn health concerns into market opportunities, while deflecting attention from its role in the obesity epidemic. The Ozempic era could therefore have the unintended consequence of consolidating the food industry’s market power, while perpetuating price inflation and unhealthy food environments.

Stay tuned on this one.