Nestle S.A. (OTC:NSRGF, VTX:NESN) is embarking on the development of "companion" products aimed at capitalizing on the growing popularity of weight loss drugs, particularly Novo Nordisk (NYSE:NVO)'s Wegovy.
CEO Mark Schneider revealed that the surge in GLP-1 diabetes treatments, such as Ozempic and Wegovy, which suppress appetite and aid in weight loss, has contributed to recent declines in food industry stocks.
Nestle is proactively addressing this challenge by working on a range of products that can complement these weight loss treatments, the company said.
Schneider told Bloomberg that most of Nestle's portfolio remains unaffected by the weight loss drugs' rise. Even if demand for products like chocolate, ice cream, and frozen pizzas decreases, Nestle is preparing products that can support consumers' nutritional needs during their weight loss journeys.
Concerns have arisen that individuals taking medications like Wegovy may reduce their food consumption, affecting Nestle's food-related products. However, Schneider is optimistic about coffee consumption, given its lower caloric content and consumers' reliance on it for caffeine.
In contrast, Walmart has already observed decreased food-shopping demand among individuals using diabetes drugs like Ozempic and Wegovy.
Nestle's work on "companion products" aims to not only assist consumers in their weight loss efforts but also help them avoid regaining weight, especially since GLP-1s are not a permanent solution. The company is also exploring smaller portion sizes and offering products like Optifast meal replacements for weight loss.
Earlier, Nestle reported a 0.4% decline in sales revenue for the first nine months of the year, despite an 8.4% increase in the prices of its products globally. The company attributed this decline to rising inflation and expects full-year growth to be around 7% to 8%.
Nestle expects its full-year operating profit margin to be between 17% and 17.5%.