Shares of Coca-Cola Co. and PepsiCo Inc. experienced a significant decline following statements made by Walmart Inc.’s U.S. CEO, John Furner. In an interview with Bloomberg, Furner revealed that weight-loss drugs like Ozempic and Wegovy were causing customers to reduce their grocery purchases, particularly those high in calories.
Walmart has the ability to track which of its customers are using these drugs and has noticed a slight decrease in overall purchases, as well as a reduction in units and calorie intake. Unsurprisingly, Furner’s remarks had a negative impact on the stock prices of Coca-Cola and PepsiCo.
Coca-Cola shares dropped by 4.8% (KO) and PepsiCo experienced a decline of 5.2% (PEP). However, both companies saw a minor recovery early on Friday.
Experts have expressed concerns about the potential implications of the growing popularity of anti-obesity medications on the food and beverage industry. They believe that companies may need to adjust their product offerings to adapt to changing consumer behavior.
In fact, analysts from Morgan Stanley predicted that various sectors, including packaged-food and beverage makers, restaurants, grocery stores, and weight-loss programs, would be affected. They estimated that the number of patients using these medications could reach 24 million people within the next decade, accounting for nearly 7% of the total U.S. population.
Currently, approximately 45% of the U.S. population is classified as obese, with 70% considered overweight.
As the frenzy surrounding Ozempic and Wegovy continues, Morgan Stanley raises its forecasts for the weight-loss drug market to $77 billion.
The Impact of Weight-Loss Drugs on Food Consumption
A new report suggests that weight-loss drugs, specifically AOM (Anti-Obesity Medications), have the potential to bring about a significant and lasting change in the eating habits of a large group of people. The drugs, including Novo Nordisk’s Wegovy and Ozempic, as well as Eli Lilly’s Mounjaro, have gained immense popularity in the United States. So much so, that there have been instances where supplies have run short, forcing the U.S. Food and Drug Administration to caution against the use of counterfeit versions.
These medications are administered through weekly injections and replicate the effects of a gut hormone called GLP-1 (glucagon-like peptide). GLP-1 helps in controlling blood sugar levels and reducing appetite. It is this direct impact on appetite and calorie intake that makes AOM so promising.
Walmart has also reported an increase in demand for Ozempic and Wegovy, which has benefited its pharmacy business.
In terms of bonds, both Coca-Cola and PepsiCo have seen fluctuations in their buying activity. While the charts from BondCliQ Media Services indicate better buying for Coca-Cola and PepsiCo bonds initially, sellers were observed later on. Coca-Cola has $36.8 billion in outstanding bonds, while PepsiCo has $39.9 billion.
As for their stock performance, Coca-Cola’s stock has experienced an 18% decline year-to-date, while PepsiCo’s has seen an 11% decrease. It is worth noting that despite these setbacks, the S&P 500 has managed to gain 11%.