More Americans are expected to try the drugs as a pill rather than as a shot because the medication will be cheaper and many patients are hesitant to inject themselves.

The U.S. Food and Drug Administration approved Novo Nordisk’s Wegovy GLP-1 pill on Monday, sending shares of food companies down on Tuesday. Eli Lilly’s rival medication is expected to gain approval from regulators next year.

Shifts in consumer taste

Food companies including Conagra Brands and Nestle are already dealing with shifts in consumer tastes toward higher protein and smaller portions due to the popularity of weight-loss injections, and analysts believe widespread GLP-1 adoption could mean long-term changes in demand.

To cope, businesses are promoting products with more protein, tweaking labeling to say they are GLP-1 friendly and working with large retailers to better market products.

“We are seeing people cut (back) specifically on salty snacks, liquor, soda, drinks, and bakery snacks, and more focused on protein and fiber, so we expect food companies and also restaurants to cater to this audience that is growing,” said JP Frossard, consumer foods analyst at Rabobank.

“We’ll see more access to those drugs and a higher addressable market for products that have in mind the needs of the GLP-1 user,” he said.

Andrew Rocco, stock strategist at Zacks Investment Research, called Novo’s approval “groundbreaking” because the pill would be cheaper than the injectable version of Wegovy and deliver the same weight-loss metrics. “High protein, smaller portions, and functional food innovation will be necessary,” he said.

Food companies are taking note

Some 40 per cent of American adults are obese, U.S. government data shows, and around 12 per cent of adults say they currently take GLP-1 drugs, according to a poll published last month by health policy research organization KFF.

Households using GLP-1 medications cut spending at grocery stores by 5.3 per cent and fast-food restaurants by about 8 per cent on average, according to a Cornell Research study published last week that used purchase data collected by Numerator from about 150,000 households.

Those reductions largely faded when households stopped using the medication.

“The decreases we saw will likely show up in a much broader slice of the population” because of weight-loss pills, said Sylvia Hristakeva, one of the study’s co-authors. She said the cheaper price and ease of use of pills will also make it likely that people use the medication for longer.

While the Cornell study found modest increases to spending only in a handful of categories like yogurt and fresh fruit, companies are taking note.

‘GLP-friendly’ foods

Earlier this year, Conagra started labeling some of its Healthy Choice frozen meals with high protein and fiber as “GLP-1 friendly.” A spokesperson said those meals are selling faster than rival products making similar claims on their packaging. The company plans to introduce new Healthy Choice recipes with the same labeling in May and work with grocers like Walmart and Kroger to market them, the spokesperson said.

French dairy company Danone, which makes Oikos Greek yogurt, said in a statement that it is seeing double-digit growth in its high-protein offerings, a trend that has accelerated with the adoption of GLP-1 medications.

Nestle, the world’s biggest food company, has also introduced new frozen meals that cater specifically to GLP-1 users, called Vital Pursuit. The Swiss company did not respond to a request for comment.

Fast-casual Mexican chain Chipotle on Tuesday added a “High Protein Menu” that features, among other items, a single cup of chicken or steak.

In recent months, some restaurant chains including Olive Garden have added menu items for smaller, cheaper portions.

Noodles & Company marketing head Stephen Kennedy said such menu additions were about offering guests “options that satisfy without going overboard.”

— Additional reporting by Savyata Mishra in Bengaluru

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The fast-food company is closing its offices “out of respect,” and to “provide dignity, confidentiality, and comfort to our colleagues,” said the source, who was not authorized to speak to the media.

“It used to be that folks would be called into a conference room with the windows papered over and then have to walk back to their desk to collect their personal belongings and leave with their head down,” the source said.

McDonald’s will have more employees going into new roles this week or receiving promotions then being laid off, the source added. The chain has more than 150,000 employees globally, with about 70 per cent based outside of the U.S., including in company-owned restaurants.

The layoffs do not include the more than two million worker in franchised McDonald’s restaurants around the world.

Chicago-based McDonald’s did not immediately return a request for comment.

McDonald’s said in January that it would review corporate staffing levels as part of an updated business strategy, which could lead to layoffs in some areas and expansion in others.

As part of updating its strategy, McDonald’s also plans to build new restaurants. It has hiked prices on its menu over the last year as commodity and labour costs have soared.

— Reporting for Reuters by Jessica DiNapoli and Hilary Russ in New York.

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In a sign of the escalating squeeze on food supplies and rising prices, a government source told Reuters that India could restrict sugar exports for the first time in six years to prevent a surge in domestic prices.

Meanwhile Indonesia, the world’s biggest palm oil exporter, will remove a subsidy on bulk cooking oil and replace it with a price cap on the raw materials for local refiners.

“It is a major issue, and frankly I think the problem is even bigger ahead of us than it is behind us,” Gita Gopinath, first deputy managing director of the International Monetary Fund, told Reuters of rising food security concerns.

Protectionism is looming large at Davos, prompting calls for urgent negotiations to avoid a full-blown trade war.

“It’s very important for the leaders of the world to sit at the table with calm and talk about how we will manage trade and food and investment,” Jay Collins, vice-chairman of banking, capital markets and advisory at Citigroup told the Reuters Global Markets Forum in Davos.

“There’s a lot of conversations actually with the G7 happening here in the past 48 hours,” Collins said.

Hoarding

For residents in countries in sub-Saharan Africa, for instance, 40 per cent of their consumption is spent on food, Gopinath said. As well as a “huge hit to the cost of living,” price rises have given rise to hoarding by governments.

“We have about 20 plus countries that have put restrictions on exports of food and the fertilizers, and that can only compound the problem and make things worse,” she said on Monday.

Russia’s invasion of Ukraine, which Moscow describes as a “special military operation,” has led to a sudden crunch in a crisis that was already in the offing.

“We were facing an extraordinary food crisis before Ukraine, food costs, commodity prices, shipping costs were already doubling, tripling, quadrupling,” David Beasley, executive director for the United Nations’ World Food Programme, said.

The number of people “marching to starvation” has risen from 80 million to 276 million over the last four to five years, Beasley told Reuters in an interview in Davos.

“To keep the ports closed as the harvest season is now coming in Ukraine in July and August, it means a declaration of war on global food supply,” he said.

Many companies at Davos have been in touch about how they can act to address the food crisis, Beasley added.

‘Not sustainable’

“Agriculture has to be part of the solution to climate change and has to tackle food security,” Erik Fyrwald, CEO of Syngenta Group, said during a panel discussion on Monday.

Fyrwald said Syngenta has demonstration farms that show how farming practices such as not tilling the soil and covering crops in the winter to prevent soil erosion were better for soil, food security and climate change.

Another potential solution to the food crisis is to tackle waste, Gilberto Tomazoni, CEO of JBS, the world’s largest meat processor, told a WEF panel on Tuesday.

“Humanity is faced with two big emergencies at the same time, we need to face climate change and we need to produce more to feed a growing population,” Tomazoni said.

“And the way we are producing today is not sustainable. This is our big, big challenge. Food waste, we need to take on this situation,” Tomazoni added.

— Reporting for Reuters by Jessica DiNapoli, Dan Burns and Divya Chowdhury.

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