Tatton Teaser

Posted 29 November 2023

Type-2 diabetes and obesity ‘GLP-1’ drugs Ozempic and Wegovy have been hailed as breakthrough treatments. They work by mimicking the hormone released after eating which increases insulin production, reducing appetite and ultimately making patients feel fuller. The health benefits of combating obesity are numerous but, aside from these, the drugs have caused a shake up in the healthcare sector. The drug makers Novo-Nordisk and Eli Lilly have benefitted significantly, whereas companies selling traditional obesity treatments have seen steep losses.

Outside of healthcare investors are also speculating on how these drugs might change consumer behaviour and the knock on effect this creates. Walmart recently announced that it has seen a “slight pull back in [the] overall basket” of its customers  that are taking GLP-1 drugs and this is while only less than 1% of the US population is currently taking GLP-1 drugs. The number of patients will only increase and there are some food categories that are particularly exposed to a change in consumer appetites. For example, around 1 in 10 US adults account for over 30% of confectionery consumption and just 20% account for 70% of its ice cream consumption. Indeed, Krispy Kreme was recently downgraded by analysts due to fears around of the drugs’ effect on demand.

It is too early to tell the impact GLP-1 drugs will have outside of healthcare over the longer term, however, the change in consumer habits is a very interesting consequence and could have big impacts on companies making fatty foods.

Source: Bloomberg, Pendal Group

Thank you to John Messer for the note

Subscribe to the Tatton Weekly Email

Get the latest news from Tatton HQ directly into your inbox every week. Packed with industry insights, our weekly mailing will keep you informed on the latest news from Tatton and beyond.

You can unsubscribe at any time by clicking the link in the footer of our emails. For information about our privacy practices, please click here.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp’s privacy practices here.

Important notice:

The Tatton Weekly is provided for information purposes only and compiled from sources believed to be correct but cannot be guaranteed.  It should not be construed as an offer, or a solicitation of an offer, to buy or sell an investment or any related financial instruments. Any opinions, forecasts or estimates constitute a judgement as at the date of publication and do not necessarily reflect the views held throughout Tatton Investment Management Limited (Tatton). The Tatton Weekly has not been prepared in accordance with legal requirements designed to promote independent investment research. Retail investors should seek their own financial, tax, legal and regulatory advice regarding the appropriateness or otherwise of investing in any investment strategies and should understand that past performance is not a guide to future performance and the value of any investments may fall as well as rise and you may get back less than you invested.

Any reader of the Tatton Weekly should not use it as a guide or form the basis of a decision relating to the specific investment objectives, financial circumstances or particular needs of any recipient and it should not be regarded as a substitute for the exercise of investors' own judgement or the recommendations of a professional financial adviser. The data used in producing the Tatton Weekly is for your personal use and must not be reproduced or shared.

Please select all the ways you would like to hear from Tatton Investment Management: