Shares of junk food companies plummet as Ozempic frenzy causes makers of Jell-O, Fritos, and Pringles to hit record lows

The rising popularity of appetite-suppressing weight-loss injections is threatening the business prospects of some of the biggest snack food makers, which saw their shares plummet this week.

Shares of Jell-O maker Kraft Heinz, Pringles maker Kellanova and soft drink giant PepsiCo, owner of Frito-Lay, all hit new 52-week lows on Friday as investors wondered whether weight-loss injections will curb America’s appetite for snacks .

Mondelez International, maker of Oreos, Ritz Crackers, Chips Ahoy and other popular snacks, saw its shares fall 8.28 percent this week, closing Friday at the lowest level since November last year.

Drugs such as Wegovy and Ozempic belong to a class of drugs known as GLP-1 agonists, which were originally developed to treat type 2 diabetes but also mimic a gut hormone that suppresses appetite and promotes feelings of fullness.

Sales of these drugs are soaring, leading to questions about whether an increased consumer focus on weight loss could dampen sales for snack makers.

Drugs such as Wegovy and Ozempic belong to a class of drugs known as GLP-1 agonists, which mimic a gut hormone that suppresses appetite and promotes a feeling of fullness

Some companies are already preparing for a possible future in which the drugs’ widespread use dramatically changes consumer habits.

Slim Jim beef jerky maker Conagra Brands said Thursday it may consider changing the portion sizes of its snacks if the increasing use of weight-loss drugs changes consumption patterns.

“Ultimately, if we see changes in consumer eating patterns, let’s say they move to smaller portions… (then) we design smaller portions,” CEO Sean Connolly said on a quarterly conference call.

Conagra, which also makes Act II popcorn, could consider changing the ingredients in some products if consumer preferences change, Connolly said, but added that he did not see such changes necessary in the next six months.

Connolly told Reuters that Conagra scientists are studying consumer behavior for possible shifts.

“One of the things that scientists can see on the market now is clearly the early days of these drugs being used to help people control their weight,” he said. “One of the things companies need to do is understand what the implications will be… if that behavior becomes more broadly based.”

The use of weight-loss drugs could force food companies to rethink their sales and profit forecasts and change prescriptions, said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.

“It’s certainly a concern that the weight-loss drugs may have a significant impact on many consumer packaged goods,” Schulman said.

Adoption of weight-loss drugs could force food companies to rethink sales and profit forecasts and change recipes, experts say

Some companies are already preparing for a possible future in which the drugs’ widespread use dramatically changes consumer habits

CFRA Research analyst Arun Sundaram said some packaged food companies are concerned about the long-term effects of the drugs because they sell products that are high in sugar and not necessarily healthy.

Meanwhile, Walmart has revealed that consumers are buying less food thanks to the increasing popularity of weight loss injections.

Walmart’s U.S. CEO John Furner told Bloomberg News that the company is seeing signs of people taking the shot buying “fewer units, slightly fewer calories.”

But as the impact of the drugs ripples through society, there are also financial winners, including Denmark-based Novo Nordisk, the maker of Ozempic and Wegovy.

The drugmaker last month overtook LVMH as Europe’s most valuable listed company, valued at about 385 billion euros ($403 billion) – slightly more than Denmark’s gross domestic product.

In August, the Danish government cited Novo when raising its economic growth forecast for this year.

Airlines could also be surprise winners, after new analysis suggested United Airlines could save $80 million a year in fuel costs if every passenger lost 10 pounds.

A lighter plane full of leaner people would significantly reduce the cost of flying, Sheila Kahyaoglu, a Jefferies Financial analyst, found.

Kahyaoglu looked at United, but said the benefits would apply to all airlines.

She concluded in a report released last week and obtained by Bloomberg that the drugs could be a game changer for airlines, where fuel and labor are the biggest costs.