By Simpactful Senior Partner, Heather Burgess

This year’s holiday cards and posts featuring newly svelte figures were concrete proof that the use of GLP-1 drugs has hit a tipping point. In April 2024, KFF, a nonprofit health policy research, polling, and news organization, released a new survey about the prevalence of semaglutide drugs, also known as GLP-1 agonists. KFF’s latest Health Tracking Poll examines the use of an increasingly popular group of drugs used to treat obesity, diabetes, and heart disease – that include Ozempic ™, Wegovy™, and Mounjaro™. KFF found that roughly one in eight American adults (12%) say they have taken a GLP-1, including 6% who say they are currently taking one of these drugs. This represents about 1/3 of the potential market for currently approved FDA indications for obesity, diabetes, and heart disease. These conditions impact 129 million Americans. But this may just be the tip of the iceberg for these drugs as researchers are uncovering more use cases. Just last week, Zepbound™ was approved by the FDA to treat obesity-caused sleep apnea, and earnings calls for manufacturers like Eli Lilly have indicated further studies are underway for the treatment of “hedonic” issues like alcohol and drug addiction, nicotine addiction, gambling, and sex addiction, as well as eating disorders, psoriasis, and depression.

Why should brand leaders care? These drugs have the potential to drive significant and rapid transformation in Category demand, shopping and usage habits, and household spending priorities, which will have far-reaching implications for Brand and Channel strategies. I surveyed some of the Simpactful Senior Partners and Practitioners who have held executive roles with both brands and retailers, and here is a sample of the impacts:

1) Household Budget Management and Prioritization (all categories): The KFF study found that 54% respondents are struggling to cover the cost of GLP-1s – even with insurance coverage, and 22% say it is “very difficult.” Of those with insurance, 25% reportedly have the drugs fully covered, 56% paid a portion, and 19% still must pay in full. Given that the list price for these drugs ranges from $936 to $1,349, the adoption of these medications carries a significant impact on household budgets at a time when we are already seeing spending shifts behind inflation and housing cost increases. Furthermore, the drugs are not covered by Medicaid for those 65+ seeking to use them for obesity.

Potential Implications: Medicaid policy changes that expand access; discretionary spending pattern changes (beauty, fashion, dining & entertainment, etc.); channel shifts; price elasticity impacts; trade down behavior; and growth of private label.

2) Preference and Consumption Changes (Food and Beverage, Snacks, Novelties, Small Appliances, Cookware, Food Storage): A recent study by Numerator and Cornell’s SC Johnson College of Business found that households with at least one user of GLP-1 drugs reduced grocery spending by about 6% within six months of starting the drugs. For higher-income households, the spending cut is as much as 9%, with spending declines eventually leveling off. Why? Patients report that the drugs support healthier eating patterns, including reduced hunger, better portion control, a decrease in cravings for unhealthy foods, and a shift in food preferences toward more balanced, nutritious options such as produce, lean proteins and grains. Some users also report cravings for “bright,” “citrusy,” or acidic flavors – while others are looking for simple high protein meal replacements. And the drugs seem to alter demand for “hedonistic” categories.

Potential Implications: Proliferation of category and shopper segments; radically altered shopping patterns, including less time and money spent in the center aisle; accelerated declines in adult beverage or nicotine categories; innovation across fresh, refrigerated, frozen, prepared foods, beverages and snacks; changes to shopping frequency and in food preparation habits, storage needs or seasoning; growth in “fresh convenient” categories and Divestiture; and M&A activity.

3) Evolving OTC and Prescription Demands (Dietary Supplements, Personal Care, Skin Care, Cough, Cold, Flu, Diabetes Care, Longevity solutions): GLP drugs are already impacting patient interest in weight management and co-morbidity conditions and will likely also impact longevity. Declines in diabetes or rapid weight loss will also impact skin care, and studies are underway to understand the inflammation impacts related to changes in weight and metabolic health.

Potential Implications: Growth in the OTC weight loss and supplement categories with ingredients like fiber, probiotics or green tea extracts – and blurring of these benefits into other food & beverage categories; Reduction in diabetes-related dry skin care or blood glucose monitoring needs and growth in skin firming topicals and devices; Changes in demand for Cough, Cold, Flu and Pain medications as inflammatory markers decline and stress on joints is reduced.

4) Fitness and Wellness Products and Services: Consumers using GLP-1 drugs may be more inclined to seek out more health information and content, to track their health and fitness or to participate in wellness, recreational or fitness activities more frequently.

Sample Implications: Emergence and growth of new influencers, growth of health trackers, insoles and knee/ankle braces, athleisure clothing, infrared red-light devices, fitness equipment, body contouring products, etc.

What Actions Can Brand Leaders Take?

  • Revisit Landscaping & Segmentation, with an Emphasis on Scenario-Planning: All of this is unfolding quickly and the impact of these drugs on consumer behavior, existing and new category demand, points of market entry, and points of market exit are significant. Simpactful Senior Consultant, Jennifer James, has led numerous landscaping efforts. “It is critical that brands understand and prepare for a rapid shift in consumer segments and behavior, and the WHY behind those changes to formulate potential scenarios that can inform brand plans. They must also consider likely countertrends, which almost always accompany shifts like this. This could include a rejection of GLP-1s for more natural approaches.” Uzma Rauf, Simpactful Shopper Insight Expert agrees. “It’s not enough to anticipate consumption changes as adoption of these drugs is and will drive changes to the channel, shelf and ecommerce algorithms, as well. Brands that win will understand these early so they have the right solutions for shoppers and retailers.”
  • Refresh Category Growth and Innovation Strategy: Consider “Where to Play” and “How to Win” choices, Capability and Organizational requirements in light of anticipated shopping and consumption shifts, as well as emergent opportunities. As an EVP, Martin Hettich led some of Procter & Gamble’s biggest transformations and sees this work as imperative for Simpactful clients. “Effective leaders have a clear vision for how to drive incremental growth, and to preserve share of wallet and shelf during this period of change with innovation designed to win in the market. It may require bold choices and new capabilities or partnerships.”  Simpactful Co-Founder and Chief Customer Officer, David Friedler concurs, “It is not enough for manufacturers to consider their own bottom line. Those that succeed also have a compelling vision and plans that consider retailer needs through this period of change.”
  • Hone Your Brand Strategies, Including Portfolio and Equities: Once brand and innovation strategies are in place, it is necessary to evaluate branding strategies to ensure you have a plan that intuitively supports retailer, innovation, and evolving consumer needs. For instance, if you identify the opportunity to launch a single serving high protein cake mix, it will be necessary to determine if it can fit under your existing baking brand or would be better suited under a wellness brand. Simpactful Chairperson, John Torru, notes, “We have been monitoring the GLP-1 trend for some time. Simpactful’s team of experts have already been brought in to evaluate Category strategies as well as to support divestiture, and M&A strategies in light of these market shifts, particularly in Food and Beverage where brands are feeling the earliest impact of the GLP-1 trend. We expect to see this cascade.”
  • Jobs-to-be-Done, and Claims: J.M Smucker veteran Marketer, Charlene Zappa, notes, “Consumer and shopper understanding is more important than ever. Brands need to be clear about what problem or need consumers truly desire through tools like Jobs-to-be-Done. A gardening supply company could solve the same problem that a prepared salad kit solves when thinking broadly. Then, brands need to be transparent and compelling with benefit language, claims and naming to help break through the clutter for all shoppers, including GLP-1 users, non-users and lapsed users. This is as true for the virtual shelf and SEO as for the in-store shelf and pack.”
  • Channel Strategies and Partnerships: With shopping pattern changes comes significant channel risk and opportunity. According to former Kroger executive and Senior Partner, Jill McIntosh, “Retailers have a vested interest in winning share of wallet as shopping patterns change. They will be looking to optimize not only assortment, but plan-o-grams, price ladders, and even space allocation to match any shifts in demand.” Simpactful founder, Tom O’Brien agrees. “The industry has experienced ‘food swings’ in the past with things like the banning of certain sugar substitutes, the Adkins/South Beach, low carb diets etc. I believe a big part will be the tolerance levels of GLPs for a broader market, the insurance coverage and a deeper dive into the actual post use dietary behaviors. These are the moments when brands can redefine their value to retailers. Buyers and senior Retail merchants will be looking for Category Captains who are willing to partner to explore shopper-based demand and new innovations that can preserve trips and basket size or even drive incrementality. Simpactful has built an incredible team of seasoned experts from most major retailers and categories, as well as shopper insight and shelf innovation experts to support clients through this change. The reaches could be further than anyone realizes if this radically reduces or extends lifespans.”

Do you need help assessing the GLP-1 impact to your category? Simpactful can help! We’ll roll up our sleeves with you to identify risks and exciting new opportunities. Contact our team today at contact@simpactful.com or 925-234-6394. Visit www.simpactful.com