Big banks predict junk food giants to lose BILLIONS over next decade as Wegovy ... trends now
The rise of weight-loss drugs isn't only shrinking Americans' waistlines, it could also shrink food corporations' bottom lines.
Some experts predict junk food companies - already battling a rise in health conscious customers - could face a tobacco-like demise due to drugs like Ozempic and Wegovy, which reduce cravings and make people feel full longer.
Big banks, such as Morgan Stanley, predict 24 million people, or seven percent of the US population, will be taking weight-loss drugs by 2035.
An analysis by the bank also predicts patients prescribed the drugs will consume one-quarter of the candy, confectionary and other junk food they did before - slashing billions of dollars from annual revenue.
And corporations are already spooked. A recent analysis found executives at junk food companies are increasingly talking about the medications with investors.
A survey conducted by Morgan Stanley found that 73 percent of people ate less confectionary food, which includes sugary candy, chocolate and some baked goods.
Like snack-makers, major players in the fast food industry, such as McDonald's, Burger King and Yum Brands, which owns KFC and Taco Bell, could also see falling demand
Morgan Stanley’s food analyst Pamela Kaufman said in a report: 'The food, beverage and restaurant industries could see softer demand, particularly for unhealthier foods and high-fat, sweet and salty options.'
The new class of medications can lead to a 20 to 30 percent reduction in daily calories, and people tend to eat less high-sugar and high-fat foods, meaning the makers of chips, cookies and baked goods could take a hit, with banks predicting a drop in consumption by as much as three percent through 2035.
While any negative impacts are likely to be gradual, investors and c-suite executives have already begun to worry.
Reuters' Breakingviews scoured the transcripts of corporations' presentations, events and earnings calls, which is a conference between the management of a company, financial analysts, media and