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Nestlé Pursues Profits by Catering to Ozempic Appetites

In a move that could be dubbed "capitalizing on calorie counting," food giant Nestlé has unveiled a cunning strategy to cash in on the weight-loss drug craze. Facing concerns from investors about the potential impact of appetite suppressants like Ozempic and Wegovy on future sales, the company has decided to embrace the trend rather than fight it.

Unveiling the Vital Pursuit Line

Nestlé's latest offering, the Vital Pursuit line, is a collection of frozen meals designed specifically for consumers who are taking GLP-1 agonist medications. These appetite-quelling drugs, which have been used by a staggering 1 in 8 American adults, according to CNBC, have caused a seismic shift in consumer eating habits.

Catering to Calorie-Conscious Cravings

The Vital Pursuit products, which include pint-sized pizzas and petite pastas, are tailored to meet the nutritional needs of those who are eating less due to the appetite-suppressing effects of drugs like Ozempic and Wegovy. These meals come in smaller portions and are fortified with essential nutrients that consumers might be lacking if they're consuming fewer calories.

A Shrewd Business Move

Nestlé's move to cater to the Ozempic crowd is a clever strategy to "expand and cash in" on the weight-loss drug phenomenon, as CNN aptly puts it. By positioning itself as a solution for the nutritional challenges faced by those on these medications, the company aims to remain relevant and profitable in the face of changing consumer habits.

Capitalizing on a Growing Trend

The frenzy surrounding weight-loss medications has reached unprecedented heights since the introduction of Ozempic in 2017. According to Novo Nordisk, the company behind Ozempic and Wegovy, these drugs accounted for a staggering 41% of their 2023 sales, totaling around $14 billion. With 40 million users reported, the demand for these medications has led to shortages and a surge in interest from companies looking to capitalize on the trend.

A Nutritional Balancing Act

One of the key concerns for those taking GLP-1 agonists is the potential loss of lean muscle mass and aversions to protein-rich and fatty foods. Nestlé's CEO, Mark Schneider, acknowledged this challenge, stating, "When you eat less, you have certain needs of vitamins, minerals, and supplements. You want to be sure that the weight loss gets supported. You want to be sure that you limit the loss of lean muscle mass."

Investor Anxiety and Stock Fluctuations

Nestlé's foray into the Ozempic market was preceded by a wave of investor anxiety that sent the company's stock tumbling to a near two-year low in October. This dip followed comments from John Furner, the CEO of Walmart's U.S. operations, who noted a "slight pullback in overall basket" and "slightly less calories" being purchased by customers using weight-loss drugs.

Market Research Backs Up Concerns

A report by Morgan Stanley, using data from market research firm Numerator, supported Furner's observations. The report found that Ozempic users slashed their grocery store spending by up to 9%, with snacks and sweets taking the biggest hit. Conversely, sales of vegetables and protein saw a slight uptick. This trend caused share price tumbles for companies like Lindt & Spruengli, Anheuser-Busch InBev, Unilever, and Danone.

Pricing and Positioning

Nestlé's Vital Pursuit line will retail for $4.99 per meal, a dollar more than a DiGiorno personal pepperoni pizza at Target. This pricing strategy positions the line as a premium offering, catering to the health-conscious and weight-conscious consumer.

Competition and Industry Adaptations

Nestlé is not the only company adapting to the changing market dynamics brought about by weight-loss drugs. WW International, formerly WeightWatchers, has introduced a new food plan specifically for those on these medications. Luxury gyms are launching clinics with access to medical professionals who can prescribe the drugs, and struggling vitamin and supplement chain GNC has announced plans to add a dedicated section in its 2,300 stores for weight-loss drug users.

A Promising Market Opportunity

As Steve Presley, CEO of Nestlé North America, stated, "We're leveraging our deep understanding of consumers and nutritional science to stay ahead of the trends that are shaping consumer behaviors, and innovating across our portfolio to deliver products people will love."

With its Vital Pursuit line, Nestlé appears poised to capitalize on the growing market for weight-loss drug-friendly foods and beverages.

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