Impact of weight loss drugs on demand for sweets? Sugar traders are not concerned

With the global popularity of GLP-1 drugs, originally used to treat diabetes but now widely used as weight loss tools, these drugs are significantly reducing people's appetite and food intake, thereby affecting the demand for sugar and food markets worldwide.

Last month, Morgan Stanley predicted in a report that by 2035, approximately one-tenth of the U.S. population is expected to use GLP-1 drugs, leading to a 1.5% to 2.5% decrease in the average daily calorie intake of Americans, especially with a potential 5% decrease in consumption of baked goods, candies, and sodas.

Furthermore, multiple analyst surveys have shown that the widespread use of GLP-1 drugs has already led to reduced consumer spending in supermarkets and restaurants, with a global per capita sugar consumption showing a downward trend. Data shows that in 2022, the global per capita sugar consumption was only 22.1 kilograms, a decrease of 3.5% from 2016, with Europe decreasing by 3.3%, and a significant 6.1% decrease in the trade regions of the United States, Mexico, and Canada. With the popularity of GLP-1 drugs, countries like the UK may lose tens of thousands of tons of sugar annually.

However, despite warnings from Walmart executives that appetite-reducing drugs like Novo Nordisk's Ozempic and Eli Lilly's Zepbound are impacting food sales, sugar traders and analysts are not concerned about the impact of these drugs on sugar.

Reportedly, during the New York Sugar Week, traders from around the world gathered to discuss their views on future sugar supply. However, they paid little attention to the issue of sugar demand. Additionally, at a sugar industry banquet, Circana's Lyons Wyatt encouraged companies to understand the "demand" of GLP-1 drug users and to offer diversified products, including smaller portion sizes. But it seemed that no one was paying attention on-site.

In contrast, Stephen Geldart, head of the analysis department at Czarnikow Group in London, expressed great interest in this topic, believing it to be a very important trend. He said, "Perhaps I am wrong, but if no one else is paying attention to this issue, that's great. I am happy to focus on things that others have not noticed."

In fact, the decline in sugar demand caused by GLP-1 drugs has already affected the stock market. Last October, Walmart announced a drop in the S&P Consumer Staples Index due to reduced food purchases by consumers. Due to the uncertainty surrounding the impact of these drugs, analysts at Truist Securities downgraded the stock rating of the donut chain Krispy Kreme. Even Nestlé has introduced a range of new frozen foods targeting consumers using GLP-1 drugs.

Finally, the global weight loss market has vast prospects, with Goldman Sachs predicting a market size of over $100 billion in the next decade. Analysts also point out that with the popularity of GLP-1 drugs, cheaper generic drugs have appeared in the market, which will also drive an increase in the overall usage of these drugs. For example, in Brazil, Biomm SA plans to launch a cheaper version after the patent expiration of Novo Nordisk's Ozempic According to the investment firm Ace Capital, this could lead to as many as 7 million Brazilians starting to use this medication