Which companies will be the winners of the incoming revolution from GLP-1 or so-called fat buster drugs such as Novo Nordisk (NYSE:NVO)'s Wegovvy and Eli Lilly's Mounjaro?
Barclays has tried to answer that question by looking at the countries with the most obese populations based on a BMI index and on the companies that operate in them.
English-speaking countries and North America have higher obesity rates, while Japan and many emerging markets have significantly lower rates.
And this geographic variance will impact how companies are affected by GLP-1 drugs, Barclays argues.
"For instance, a food company perceived as being at risk due to GLP-1 drugs in the US may have a different risk profile when viewed through a geographic lens, especially if a substantial portion of its sales are in markets with lower obesity prevalence."
Several US consumer stocks already have had notable moves based on their perceived exposure to the anti-obesity drug risk factor; the bank says, but this narrative has been driven primarily by surveys and anecdotal patient reporting of behavioural changes.
In the future, the picture might be more nuanced than this with geographic exposure likely to be a key determinant as to whether a company's customer base is impacted in the near or medium term.
Barclays used adjusted BMI index values as a relevant business metric (revenue/EBIT/EPS/asset value/restaurant countries) weighted by country and then further adjusted for the obesity prevalence in each country.
Companies with a high BMI index value (27+) have higher exposure to the GLP-1 drug risk factor: but this could be positive or negative based on underlying category and emergent patient behaviour over time.
The US overall has the highest obesity rating and sectors with the highest mean BMI index values are US Retail, Apparel, E-commerce (32), US Beverages (31) and US Food (31).
Conversely, those showing the lowest mean values are EU/US HPC (0), EU Leisure (20) and EU Recycling & Packaging (19).
Companies with around 100% exposure to North America have the highest BMI index value (36): Altria, Constellation Brands (NYSE:STZ), Keurig Dr Pepper, Campbell Soup, and Dick's Sporting Goods all received this score.
But it’s not that simple
'Exposure' can be a tailwind or a headwind, says Barclays and the BMI index value only indicates 'exposure'.
“Of course, patients taking GLP-1 drugs will decrease their consumption of certain categories and likely increase their consumption of others. “
Alcohol and tobacco have been in the spotlight, due to patient reporting of reduced consumption while taking GLP-1 drugs and companies that have a high BMI index value and are over-exposed to such categories such as Altria are likely to experience headwinds.
Conversely, 'healthy' categories (such as those that aid with muscle retention e.g. protein shakes, yoghurt) and have a high BMI index value may be beneficiaries.
For many sectors, the impact is more nuanced; for example, clothing retailers may benefit from consumers changing weight, while athleisure brands could benefit from patients making healthier lifestyles and increasing physical exercise.
Companies too are unlikely to stand still and many staple companies have proven agile and resilient in the face of consumer behaviour shifts during the course of many decades (and centuries, for some).