The Ozempic Effect: How GLP-1 drugs are Revolutionizing CV Disease and continuing to transform and disrupt the CPG landscape

The obesity epidemic has reached unprecedented levels, with over 40% of American adults now considered obese. However, a new class of weight-loss drugs, known as GLP-1 receptor agonists, is rapidly gaining popularity and threatening to disrupt the entire food industry.

GLP-1 drugs, such as Ozempic and Wegovy, mimic a natural hormone to reduce appetite and regulate blood sugar levels. The results have been astounding, with participants losing an average of 15.2% of their body weight and experiencing significant reductions in cardiovascular risk factors.

The use of these drugs has skyrocketed in the U.S., with 11.8% of households having at least one GLP-1 user as of November 2023.

The impact on the food industry has been immediate and tangible. GLP-1 users consume 20-35% fewer calories and spend 2.5% less on food overall. Specific sectors, such as sugary drinks, confections, and fast food, are being hit particularly hard, with over 70% of users consuming less. Even alcohol consumption is being affected, with 66% of users drinking less.

The true extent of the GLP-1 revolution is still unknown, but estimates suggest that up to 24 million people could be taking these drugs by 2035. This projection indicates a significant user base expansion, especially as more powerful weight-loss medicines are developed with far fewer side effects. This growth underscores the urgent need for CPG brands to adapt and innovate to meet the evolving needs and preferences of GLP-1 receptor agonist users.

The recent FDA approval of Wegovy (semaglutide), a glucagon-like peptide-1 (GLP-1) receptor agonist, on March 8th, 2024, for reducing the risk of cardiovascular events in adults with cardiovascular disease and either obesity or overweight, is a significant milestone. This approval is poised to profoundly impact both the medical and consumer packaged goods (CPG) sectors. As GLP-1 receptor agonists gain traction in managing cardiovascular disease, the food and beverage industry must adapt to meet the evolving needs and preferences of this rapidly growing patient population.

?The Expanding Role of GLP-1 Receptor Agonists in Cardiovascular Disease Management:

Originally developed and approved for the treatment of type 2 diabetes, GLP-1 receptor agonists have demonstrated remarkable efficacy in reducing the risk of major adverse cardiovascular events, including cardiovascular death, heart attack, and stroke, in patients with established cardiovascular disease. The SUSTAIN-6 trial, which involved over 17,600 participants, showed that Wegovy significantly reduced the occurrence of these events compared to placebo, highlighting the potential of GLP-1 receptor agonists in managing cardiovascular risk.

Cardiovascular disease is the leading cause of death in the United States, with over 130 million adults (nearly half the adult population) estimated to have some form of heart disease as of 2023. Expanding GLP-1 drug indications to include cardiovascular risk reduction in non-diabetic patients could make these therapies accessible to a substantially larger patient population. A 2022 analysis estimated that broadening the use of GLP-1 agonists to high-risk non-diabetic patients could benefit up to 8 million additional Americans.

Given the established efficacy and growing awareness of the cardiovascular benefits of GLP-1 receptor agonists, analysts in 2023 projected robust growth for this drug class over the next five years. One forecast estimated that the global GLP-1 market would reach over?$50 billion?by 2028, with cardiovascular indications being a key driver. However, the actual pace of real-world adoption will depend on several factors beyond FDA approval, such as further demonstration of efficacy in non-diabetic populations, payer coverage decisions, cost/access issues, patient and provider awareness, and professional society guideline recommendations.

?The Impact on the CPG Industry:

The skyrocketing popularity of weight-loss drugs like Ozempic and Wegovy is driving a revolutionary change in the CPG industry. With an estimated 8-15 million Americans currently using weight-loss drugs and nearly half of all adults interested in trying them, the potential reach is staggering. Financial analysts and CPG companies are already forecasting the impact on their earnings, and the shifts in consumer behavior are becoming increasingly apparent. In October of 2023, CEO of Walmart Doug McMillon, when discussing the impact of GLP-1 drugs on Walmart sales, said: "We are seeing a pullback in overall basket size, fewer units and fewer calories."

Shifting Consumer Behavior: A Unique Opportunity for Innovation

As weight-loss drug users modify their eating habits, consuming less food overall and dining out less frequently, CPG brands have a unique opportunity to adapt and innovate. Nestlé CEO Mark Schneider has keenly recognized the potential for supplements to bridge the nutritional gap that may arise from reduced food intake. Protein-rich products are well-positioned to thrive if they can effectively target the weight-loss audience, sparking a wave of innovation in the industry. Data suggests that weight-loss drug users consume less food overall, eat out less frequently, and spend more on the food they consume. This shift in consumer behavior presents a unique opportunity for CPG brands to adapt and innovate. For instance, protein-rich products are poised for success if they can effectively target the weight-loss audience. Some forward-thinking brands are already reformulating, resizing, and rethinking their products to fit the changing consumer demands, creating 'companion products' designed to cater to the specific needs of weight-loss drug users. As people on these drugs eat less, they are also trading up in quality across nearly all categories, creating an opportunity for premium-positioned products to capture this spending power. Moreover, ingredients that help combat the side effects of weight-loss drugs, such as nausea and constipation, may see a surge in popularity. CPG companies that can incorporate these ingredients into their products and market them effectively could gain a significant competitive advantage. These ingredients are likely in different functional fibers, pre-and probiotics, and are widely used in different profiled proteins.

Fast-food chains are also feeling the impact, with a Morgan Stanley report suggesting a staggering 70% reduction in fast-food visits among people taking weight-loss drugs. This presents a challenge for these chains, which may need to consider adding menu items specifically designed to maintain the lifetime value of their customers.

?Long-Term Implications and Opportunities:

While the weight loss achieved through GLP-1 receptor agonists is remarkable, concerns about the long-term sustainability of these results persist. Reports indicate that people will likely experience rapid weight gain after discontinuing the medication, resulting in a fast return to their pre-drug starting weight, emphasizing the importance of promoting healthy eating and exercise habits alongside drug use. CPG companies have an opportunity to market their products as part of a continued lifestyle change, especially considering that 60% of users intend to stop using the drugs once they reach their target weight.

Furthermore, the psychological effects of weight loss on body image, self-esteem, and relationships with food cannot be overlooked. As consumers complete their weight-loss programs, CPG brands can create new products and marketing strategies that cater to this transformative journey's mental and emotional aspects.

The Ozempic effect represents a tidal wave of change that the CPG industry must navigate. With 22 states now having an adult obesity prevalence of 35% or higher and cardiovascular disease claiming one life every 33 seconds in the United States, the demand for effective weight-loss solutions will only continue to grow. GLP-1 receptor agonists have proven to be incredibly effective, with participants losing an average of 15.2% of their baseline weight over 104 weeks and experiencing a 20% reduction in the risk of heart attack, stroke, or death from cardiovascular issues.

The FDA approval of GLP-1 agonists for cardiovascular indications beyond diabetes is set to significantly expand the eligible patient population in the U.S., potentially reaching several million additional high-risk individuals. As the prescribing rate for these drugs continues to grow, the CPG industry must act now to position itself for success in this rapidly evolving landscape. By partnering with experts like Chew to create innovative solutions tailored to the needs of weight-loss drug users, CPG brands can survive and thrive in this unprecedented challenge. Still, the urgency of the situation and the speed required feel like the Gnarly opportunity I built Chew for, and one that perfectly illustrates what we see as an industry-wide Innovation Gap. The Ozempic effect is poised to reshape the industry as we know it, and the time to adapt is now.

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