{"id":69759,"date":"2023-10-07T02:20:55","date_gmt":"2023-10-07T06:20:55","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/weight-loss-drugs-are-threatening-food-stocks-the-fears-are-exaggerated\/"},"modified":"2023-10-07T02:20:57","modified_gmt":"2023-10-07T06:20:57","slug":"weight-loss-drugs-are-threatening-food-stocks-the-fears-are-exaggerated","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=69759","title":{"rendered":"Weight-Loss Drugs Are Threatening Food Stocks. The Fears Are Exaggerated."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000762952\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<p>        <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Consumer staple stocks stumbled again Friday, extending their losses in the wake of Walmart\u2019s warning about a dip in food purchases from consumers taking weight-loss drugs.<\/p>\n<p>John Furner, CEO of Walmart\u2019s U.S. operations, told Bloomberg on Wednesday the retailer is seeing signs of \u201cjust less units, slightly less calories\u201d being purchased among the shoppers also buying so-called GLP-1 weight-loss drugs from its pharmacy business, compared with others not filling that prescription. <\/p>\n<div class=\"paywall\">\n<p>The comments appeared to unnerve investors, with the<br \/>\n        Consumer Staples Select Sector SPDR<br \/>\n       exchange-traded fund (ticker: XLP) slumping nearly 2% the next day. It\u2019s down 3.1% for this week in response to concerns that wide adoption of the new class of weight-loss drugs could mean Americans eat and drink less. <\/p>\n<p>The damage to the sector continued Friday.<br \/>\n        Walmart<br \/>\n       stock (WMT) fell 1.7% to $156.41. The retailer didn\u2019t immediately respond to a request for comment. <\/p>\n<p>Snack and beverage companies also saw their stocks fall. Shares of<br \/>\n        Mondelez International<br \/>\n       (MDLZ)\u2014maker of Oreos, Wheat Thins, and Chips Ahoy!\u2014slid 2.6% to $63.36. Jelly company<br \/>\n        J.M. Smucker<br \/>\n      \u2018s (SJM) stock was down 1.5% to $115.00.<strong>\u00a0<\/strong>Neither Mondelez nor Smucker\u2019s responded to a request for comment.<\/p>\n<p>The consumer staples ETF overall fell 0.6% Friday, while the<br \/>\n        S&amp;P 500<br \/>\n      rose 1.2%. The broader market index has gained 12% this year versus an 11% loss for the staples ETF.<\/p>\n<p>Nearly one in three American adults are overweight, and more than 40% have obesity, according to 2017\u20132018 data from the National Health and Nutrition Examination Survey. On average, Americans consume about 3,800 calories a day, according to the U.N. Food and Agriculture Organization. That\u2019s much above the recommended daily intake of 2,000 calories for women and 2,500 for men.<\/p>\n<p>Bank of America analysts estimates that GLP-1, a category of drugs that includes Ozempic, could reduce a patient\u2019s calorie intake by 15% to 20%. If 25 to 50 million of Americans take the drugs by 2030, the total calorie consumption of the nation could be reduced by 1% to 3%, wrote Bryan Spillane, an analyst covering food and beverages at the bank.<\/p>\n<p>Weight-loss drugs have been a big driver of market gains this year: Shares of drugmakers Eli Lilly (LLY) and Novo Nordisk (NVO)have soared about 53% and 38% so far this year, respectively. Novo\u2019s obesity treatment, Wegovy, received government approval in 2021, while Eli Lilly\u2019s tirzepatide is expected to receive Food and Drug Administration approval later this year.<strong>\u00a0<\/strong>Wall Street has high expectations for the drugs, with J.P. Morgan forecasting that Lilly\u2019s weight-loss drugs could reach $50 billion in annual sales by 2030<strong>.<\/strong><\/p>\n<p>Although investors are concerned about the potential impact on sales for restaurants, snacks, and soda, those fears might be unfounded, some analysts say.<\/p>\n<p>In August, Morgan Stanley analysts led by Pam Kaufman acknowledged the incremental headwind from obesity drugs on food, beverages, and grocery companies, but said they see any shift in demand as manageable. <\/p>\n<p>Obesity medications\u2019 user pool could grow to nearly 7% of the U.S. population by mid-2033, leading to a low-single-digit reduction in calorie intake, in percent terms, the analysts said at the time. That\u2019s \u201cmanageable across most industries,\u201d as companies can adapt through innovation and portfolio reshaping, Morgan Stanley said. <\/p>\n<p>TD Cowen sees only about 1% of U.S. adult population on weight-loss drugs by 2030, the firm told CNBC Thursday. In a note last week, RBC Capital Markets analyst Nik Modi wrote that appetite-suppressing drugs are out of reach for many Americans because they are too expensive: \u201cConsumption of indulgent salty snacks that would be considered \u2018junk food\u2019 generally over-indexes toward lower-income individuals, who are unlikely to be these drugs\u2019 primary users.\u201d <\/p>\n<p> For the same reason, Bank of America doesn\u2019t expect the new class of drugs to have much impact on tobacco sales. \u201cNicotine is used as a weight management tool largely by teens and young adult women,\u201d wrote analyst Lisa Lewandowski, \u201cThis small subsegment of the smoking population may have limited access to these weight loss drugs, due to their income, location, and insurance coverage.\u201d <\/p>\n<p>Restaurants, too, will likely be minimally affected, wrote Bank of America analyst Sara Senatore. Although restaurant dining accounts for roughly one third of total calories consumed by Americans, food away from home is disproportionately lower in carbohydrates, on which GLP-1s appear to have the greatest impact.<\/p>\n<p>Furthermore, people are usually less concerned about the nutritional content of their food when going to a restaurants. \u201cConvenience, taste, and social connections are all reasons that people choose to eat out,\u201d wrote Senatore, \u201cWe don\u2019t expect those to change.\u201d<\/p>\n<p>Investors might learn more about these treatments\u2019 impact when Walmart and other retailers report earnings in November.  <\/p>\n<p>Write to Karishma Vanjani at karishma.vanjani@dowjones.com and Evie Liu at evie.liu@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/walmart-food-beverage-stocks-weight-loss-drugs-9e9c170f?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Consumer staple stocks stumbled again Friday, extending their losses in the wake of Walmart\u2019s warning about a dip in food purchases from consumers taking weight-loss drugs. John Furner, CEO of Walmart\u2019s U.S. operations, told Bloomberg on Wednesday the retailer is seeing signs of \u201cjust less units, slightly less calories\u201d being purchased among the shoppers also [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":69760,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-69759","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Weight-Loss Drugs Are Threatening Food Stocks. 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