Weight loss drugs may lead to reduced food consumption - watch these stocks
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The retail sector received a bit of a jolt on Wednesday when Walmart (WMT) pointed to weight loss drugs as a factor in a "slight pullback" in terms of items purchased and total calories represented in purchases. Walmart (WMT) U.S. chief John Furner said the company will look at the issue and find ways to mitigate it if necessary in terms of assortment.
The comments from the nation's largest retailer added some weight to the issue that has been speculated upon loosely for months. Analysts estimate that nearly 7% of the U.S. population could be on weight loss drugs by 2035, which could lead to a 30% cut in daily calorie intake due to the consumption changes for the targeted group. There is also some conjecture that the increased attention to dieting and weight loss in general could have a downstream impact on the consumption of snacks and sweets. Conagra Brands (CAG) CEO Sean Connolly has stated that if there is a decrease in calorie consumption due to weight loss drugs, the company is prepared to develop new pro-health food options and change package sizes. Kellanova (K) CEO Steve Cahillance said the company is also looking at the impact of pharmaceuticals on eating habits.
The list of stocks that could be impacted from a change in food consumption habits in the U.S. is long. The issue is relevant for grocery store names like Kroger (KR), Albertsons Companies (ACI), Grocery Outlet Holding Corp (GO), Ingles Markets (IMKTA), and Sprouts Farmers Market (SFM). There is also a case to be made that Walmart's (WMT) warning is probably something being looked at by executives at Target (TGT) and Costco (COST). Meanwhile, packaged food sellers like PepsiCo (PEP), Kraft Heinz (KHC), General Mills (GIS), J.M. Smucker (SJM), Hershey (HSY), Mondelez International (MDLZ), and Hostess Brands (TWNK) will also be watching the development. The restaurant sector could also be looked at slightly differently by investors, including McDonald's (MCD), Restaurant Brands (QSR), Yum Brands (YUM), Domino's Pizza (DPZ), Wingstop (WING) and Krispy Kreme (DNUT).
From the healthcare side of the equation, diabetes drugs such as Novo Nordisk's (NVO) Ozempic and Eli Lilly's (LLY) Mounjaro (tirzepatide) have risen in popularity as they are being used for their weight loss benefits. Along with Novo's (NVO) Wegovy (semaglutide), which is actually approved for weight loss, all are considered GLP-1 agonists.

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