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    June 10, 2024

    John Carroll of Acosta Group: How Will Ozempic and Similar Drugs Influence Consumer Behavior and CPG Industry Trends?

    Written by: Satta Sarmah Hightower
    "This is a trend that's coming. It's probably more like a two-to-three-year period as it ramps up, especially if the insurance companies start covering it. The question becomes how do CPG [consumer packaged goods] companies react to it?" — John Carroll, President, Digital Commerce and Analytic Services, Acosta Group

    Ozempic and similar GLP-1 drugs — promising better management of blood sugar levels, A1C levels, and weight loss — are more popular than ever, with millions of prescriptions written, according to recent industry data noted by The Washington Post.

    This phenomenon could have an outsized impact on the consumer packaged goods (CPG) industry. However, it’s still unclear to what extent.

    John Carroll, president of digital commerce and analytic services at Acosta Group, has spent time in CPG boardrooms exploring how this new medication could affect the industry long-term.

    To explore it all, he appeared on a recent episode of the "Unpacking the Digital Shelf" podcast, "Ozempic Hot Take: What Impact Will GLP-1 Drugs Have on the CPG Industry?"
    Explore Carroll’s perspective on CPG industry trends, the potential impact of drugs like Ozempic, and how brands could effectively navigate this shifting landscape.

    The Ozempic Boom

    Ozempic, or semaglutide, is a class of medications called glucagon-like peptide-1 (GLP-1) receptor agonists, typically used to treat diabetes, per PubMed. The Food and Drug Administration (FDA) approved Ozempic for diabetes treatment in 2017.

    However, Ozempic and similar drugs have since grown in popularity due to their "off-label" use for weight loss.

    Ozempic works by mimicking a hormone in the intestine that suppresses appetite. This can make people feel full and thereby eat less. The CPG industry, however, will have to be ready for changes in consumer behavior as a result of these drugs and the increased focus on GLP-1-friendly lifestyles.

    CPG stocks have started to decline amid Ozempic's growth. Shares of PepsiCo (PEP), Coca-Cola (KO), ConAgra Brands (CAG), and Campbell Soup (CPB) shed an average of 13.5% during one six-month period in 2023 alone, per Yahoo Finance.

    The Dow Jones Industrial Average and S&P 500 were each down 1% over the same period, which was attributed to the proliferation of drugs promising weight loss, according to an analysis by Brian Sozzi at Yahoo Finance.

    Other industry research from Walmart has shown Ozempic users actually consume less food and beverage products, as noted in The Washington Post article. All these CPG industry trends indicate companies can no longer be business as usual.

    Could Ozempic Reshape CPG?

    Carroll says research indicates drugs promising weight loss not only suppress appetites, but they may also suppress alcohol cravings. Ozempic and other drugs promising weight loss may positively impact overall health, but they still aren’t widely available to most people.

    Most insurance companies don’t cover it unless someone is diabetic or obese, and it can cost thousands of dollars a month without insurance for those who don’t have a medical diagnosis to use the drug.

    "It's been called the celebrity weight [loss] drug right now," Carroll says. "Right now, we don't see this having an immediate impact on the overall business."

    However, that could change if major drug manufacturers start to produce more commercial versions of these drugs in pill form rather than as injectables. If insurance companies start covering them, Ozempic and other drugs promising weight loss could also become more widely available.

    "We think there may be some impact here from a calorie consumption standpoint," Carroll says. "We see this as a trend that's coming. It's probably more like a two-to-three-year period as it ramps up, especially if the insurance companies start covering it. The question becomes how do CPG companies react to it?"

    How the CPG Industry Can Respond

    While Ozempic is the latest in CPG industry trends, Carroll argues CPG companies have had to navigate changes like this before.

    "What's really interesting from our point of view, this is not news to the industry from the food and beverage perspective. The food and beverage industry has had to react to this before, whether it's sugar or other additives, and food or calorie reduction overall." — John Carroll, President, Digital Commerce and Analytic Services, Acosta Group

    The Coca-Cola Company is the biggest example of these shifts. Carroll says almost 60% of the company’s total products are now either zero-calorie or low-calorie. Carroll says the industry needs to be prepared. Some people ultimately may consume fewer calories as a result of these drugs and need access to different food and beverage options to go along with their new dietary requirements.

    "If these continue to be proven effective tools, then I think it's got to be part of an overall lifestyle," he says. "I do think that will need to change and be reflected in industry strategies going forward."

    Change in CPG 'Won’t Happen Overnight'

    Carroll adds the effect of drugs promising weight loss on the industry won’t happen overnight, but rather gradually.

    Regardless of the extent of their influence, companies that want to better meet consumers’ needs and future-proof their business can’t afford to ignore Ozempic and other similar drugs.

    "This is going to be a big category, and it's going to continue to grow," he says. "Whether or not it has a major impact on the industry, whether or not it has a major impact on people's health, is the real key question."

    To hear more of Carroll’s insights on CPG industry trends, listen to the full episode.