Johan Jörgensen is the founder of Sweden Foodtech, a leading think tank on the future of food.
The views expressed in this article are the author’s own and do not necessarily represent those of AgFunderNews.
At the time of writing this article, Novo Nordisk, the pharmaceutical giant behind the weight-loss medicine Wegovy, as well as Ozempic, the version for diabetics, had a market cap of €275 billion. That’s two thirds the size of the global beef market and more than twice the combined market cap of the world’s 10 largest meat companies.
Sales of weight-loss medicines are of course nothing compared to the sales of beef, but a stock price does say something about what the market thinks about the future. And if the stock market is anywhere near correct in its assumptions, meat is in for a ride.
If you believe the captains of industry, GLP-1 will be either good for them or not much of a bother. For me, both as a user and as food think tank leader, they are wrong. Because there is one thing thin people always get wrong about us less metabolically fortunate: you think we want to take the medication to be able to stuff ourselves with more bad food. No, we do not – we do it to not have to! The difference means everything to the food sector in general and the meat industry in particular.
I have now been on Wegovy for almost a year. The result is a 12 kg drop, or roughly 15% of my body-weight. The way it has happened has been even more spectacular, especially since I am not alone in my experience. Let us dive into what all the fuss is about when it comes to what likely will become one of the biggest blockbuster drugs in history as well as having an even bigger and quicker impact on meat than the feet-dragging protein shift ever has.
First, I eat far less, some 20-25% less. That seems to be what everyone on the drug does. Second, I eat totally different things than before. Snacking is gone, I frown repulsively at heavy dishes and my food radar has not only been turned on but tuned to maximal sensitivity. After all, when you invest so heavily into something such as Wegovy (approximately €100/week since the healthcare system in my native Sweden does not subsidize it) you tend to care for it. GLP-1 is thus not only a drug that affects your physical state, but also your mental one. It goes something like this:
For my entire life I have struggled with my passionate relationship to food – I simply enjoy food a bit too much. If you combine that with a stressful work situation and a constant (perceived) need to fill up with energy to get you through the day, the kilos add up. Especially since every urban person has easy access to fast food and convenient snacking.
If I need to wolf down something between meetings in order to just survive, that behavior tends to be bad for me over time. On GLP-1 the craving does not exists. My blood sugar is stabilized and the sirens of fast food and convenience sing in vain.
GLP-1 cost benefit analysis
According to a study by PWC, 8-10% of American adults are currently on GLP-1 drugs, with 30-35% interested in them, with the high price being the main barrier. In a world where 50% of adults soon will be obese and thus susceptible to expensive and life-degrading chronic diseases such as diabetes, cardiovascular or cancer there is an interest not just from the individual side but also from societies all around the globe in curing the ills of our current food system through medication.
Mind you, the annual cost for treatment of a diabetes 2 patient is on par with the cost for GLP-1 drugs and then we have not even started on the loss of productivity and life quality that are associated with obesity.
If prices fall, more people will fit these drugs in their budgets and national healthcare systems will start prescribing them on a pure cost-benefit basis.
How many will then be on drugs such as Wegovy ? If you are to believe the PWC study probably hundreds of millions (tens of millions already use them), and every single one of them belongs to the best customers of the snacking and fast food industries. In terms of purchasing power for these industries they will within shortly likely represent about a billion or so average consumers.
It should be noted that even though the drugs are expensive, the net effect on your personal economy is not all that bad since your food expenditures also go down; effectively transferring money from food to pharma.
Fast food and processed meats
Yes, I sound like a born-again and to some extent I guess I am, but I am not alone and we will become legion. But this was supposed to be about meat, not sugared drinks and candy bars, right?
Let us divide the problem into buckets of development. We, who are on medicines such as Wegovy, do not consume fast food like we used to, perhaps not at all. If you sell most of your meat to the fast food sector I would encourage the development of a strategic plan B. That also goes for nations. Recently, in the turmoil around President Trump’s tariffs on imports to the US, Australia’s trade minister pointed out that most of Australia’s beef exports to the US goes to McDonald’s.
But even if you are not exposed vis-à-vis the fast food sector it might be worth noting that a huge part of meat production goes towards processed meat products such as sausages, another category that GLP-1 users tend to avoid more after going on the drug. And, as stated before, heavy, meat-laden plates and big steaks are less attractive, at least to an average consumer such as myself.
It would seem that the ever-rising tide of meat consumption has finally met a worthy challenger.
An uncertain future
While I would be loath to come with a distinct declaration on the future of meat based on what I have observed so far in the GLP-1 world, it would seem to me that there is more than enough to merit worry. And we should remember that a decline in cash flow can trigger the need for write-downs. That is probably where the main issue lies for the meat sector: if you have huge investments in infrastructure that might be affected by rapidly slowing business you can die far faster over the balance sheet than the PnL.
So far the food sector has reacted to the event of GLP-1 drugs with something akin to the five stages of death, described by the Swiss-American psychiatrist Elisabeth Kübler-Ross; denial, anger, bargaining, depression and acceptance.
While we are still at the beginning of the cycle, one can foresee the depression coming once the next financing round or call to the bank is due.
Because it is not just the meat sector that looks at the development, the financial sector does too and it has become more and more accustomed to the notion of stranded assets and quick-moving shifts. It should be stated that we have not seen major moves yet, but it must at the same time be said that we are still very early in the GLP-1 world.
Remaining vigilant and keeping a close dialogue with your customers is highly advised in order to pick up weak signals that rapidly can grow to have a major impact.
