Impact of GLP-1 Drugs on Consumer Behavior and Spending Habits
The use of GLP-1, a popular group of weight loss and diabetes medications, is reportedly reducing the appetite of some consumers and, consequently, their food expenditures. According to a recent survey by Morgan Stanley, most individuals taking GLP-1 claim to spend less on dining out at restaurants and ordering takeout, while a minority report cutting back on grocery expenses. The findings highlight growing concerns that the increasing demand for GLP-1 could negatively impact the earnings of major restaurant companies and manufacturers of packaged snacks, such as Hershey’s Kisses, Oreos, and Doritos. GLP-1 include Novo Nordisk’s Ozempic and Wegovy, Eli Lilly’s Zepbound, and Mounjaro diabetes injections, all of which are expected to see continued growth in demand. Morgan Stanley analysts predict that the market for GLP-1 will be worth $105 billion by 2030, with around 9% of the US population, or 31.5 million people, expected to take these medications by 2035.
Morgan Stanley analysts noted that there is mounting evidence that GLP-1 significantly affect consumer behavior and spending on groceries and restaurants. They believe that the impact of these drugs on consumer sectors will continue to increase as their uptake grows and they reshape the behavior of a demographic group that represents a disproportionately high share of calorie consumption. Nevertheless, many food and beverage companies have reassured investors that the extent to which these drugs will reduce their revenue remains unclear. According to the survey, GLP-1s are a manageable long-term pressure on restaurants, not an existential risk. Analysts emphasized that restaurants offer convenience and/or experience, in addition to food, and that GLP-1 usage is unlikely to change this. However, some restaurants may need to adapt to health-conscious consumer behavior.
Morgan Stanley’s survey of 300 consumers currently taking GLP-1 drugs in February found that 63% of participants spend less on dining out at restaurants, 28% spend about the same, and 9% spend more. Meanwhile, 61% are spending less on takeout or deliveries from restaurants, 31% spend about the same, and 8% spend more. Fewer participants reported reducing their grocery spending since starting a GLP-1, with 31% spending less, 46% spending about the same, and 23% spending more.
The survey also revealed that people tend to stick with the same restaurant but change the types of meals they order. When asked if they consume less food when dining out, 42% of participants said “always” or “most of the time,” while 44% said “occasionally.” Forty-one percent said they are “always” or “most of the time” ordering smaller portions of food overall, while 43% said they only do so occasionally. The survey also found that consumers reported reduced food consumption across the board, mainly on snacks, confections, carbonated and sugary drinks, and alcohol. Roughly half of the participants reported reducing their intake of regular sodas, alcohol, and salty snacks by 50% or more since beginning their weight loss journey, with 22% reporting that they have stopped consuming alcohol entirely.
