Nestlé prepares for the Ozempic effect

The news: Nestlé is looking to attract GLP-1 users with its latest frozen food offering: Vital Pursuits promises to deliver the nutrients that customers on weight-loss drugs need in portions aligned with their diminished appetites.

• The product line—which includes frozen pizzas, protein pasta bowls, and sandwich melts—will retail for less than $5.
• Nestlé plans to launch Vital Pursuits at select US retailers by Q4.

Nestlé takes the initiative: Nestlé is distinct among CPGs in that it is actively taking steps to shift its portfolio in response to growing GLP-1 usage, while most food makers publicly shrug off any potential negative impact.

• Mondelēz CEO Dirk van de Put expects that in 10 years, the drug’s effect on sales volumes will equate to a “margin of error”—between 0.5% and 1%, he told Bloomberg.
• Likewise, PepsiCo and Coca-Cola executives expect the impact on their businesses to be marginal, touting their wide arrays of products and portion sizes as well as a growing selection of healthier products as insurance against consumers’ changing tastes.

Other companies, like Conagra, General Mills, and WK Kellogg, expect more demand for their current offerings.

• WK Kellogg CEO Gary Pilnick continues to be optimistic about cereal as a meal replacement, noting that it is low-calorie and low-fat, and contains nutrients like vitamin D and fiber.
• Conagra sees opportunity in the frozen food space, as GLP-1 users look for meals that are portion-controlled, nutritious, and high in protein.

Barriers to entry are lifting: While GLP-1 usage is limited for the time being due to the drugs’ high cost and lack of coverage from insurers, that could quickly change as companies like Hims & Hers roll out cheaper versions.

• Anywhere between 6% to 12% of US adults have taken or are currently taking drugs like Ozempic and Wegovy, according to surveys by Gallup and KFF.
• Over half (54%) of all consumers who have taken GLP-1s found them difficult to afford, with prices ranging between $936 to $1,349 per month for name brands, per KFF.
• But Hims & Hers’ generic GLP-1 injections start at $199 monthly, making them much more accessible.

The big takeaway: Rather than dismissing GLP-1s as another weight-loss fad, brands need to take action to future-proof their businesses.

• As many as 30 million US consumers, or roughly 9% of the population, may be using GLP-1s by 2030, according to J.P. Morgan Research.
• While it’s early days, consumers on the drugs reported spending less on snacks and ice cream, cutting back on restaurants and takeout, and reducing overall food consumption.
• Thirty-eight percent are snacking less, per Kantar data reported by FoodNavigator USA—but 75% still occasionally indulge in small treats, creating an opening that food brands can squeeze through by offering up more nutritious snacks, alongside meal replacements and other supplements.