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 fee is temporary, the company said in a statement Tuesday, and is a response to a “dramatic increase in egg prices” caused by bird flu outbreaks.

“While we hope these price fluctuations will be short-lived we cannot predict how long this shortage will last,” the statement read.

The privately-held chain is known for its low prices. A standard American breakfast with two eggs is sold for $7.75 in Norcross, Georgia, where the company is headquartered. That meal is now $1 more expensive.

The price of U.S. wholesale eggs hit an all-time high in December, according to commodity data firm Expana, with a dozen eggs going for $5.57 in the Midwest and $8.85 in California.

The main factor driving egg prices higher is damage to the laying flock from bird flu. The virus wiped out more than 20 million chickens in the U.S. last quarter, data from the U.S. Department of Agriculture shows, the highest toll since the beginning of the outbreak in 2022.

The chain said it has 2,100 locations across the United States. Its website says it serves 272 million eggs every year.

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The outbreak has sickened people across the U.S. West and Midwest, with 10 hospitalized due to serious complications, according to the U.S. Centers for Disease Control and Prevention (CDC), which is investigating the outbreak. A McDonald’s spokesperson said the outbreak is limited to the United States.

“We fully expect to see more cases,” said CDC spokesman Tom Skinner. “McDonald’s has moved rather quickly to take action to, hopefully, prevent as many cases as possible.”

Previous E. coli outbreaks at big U.S. fast-food chains have caused consumers to shun those chains for months. McDonald’s USA President Joe Erlinger on Wednesday said the fast-food chain needs to rebuild trust with the public after it pulled the item off its menu at a fifth of its 14,000 U.S. restaurants.

The company pulled the Quarter Pounder from its menu at McDonald’s locations in Colorado, Kansas, Utah and Wyoming, and in parts of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico and Oklahoma.

The CDC and McDonald’s are scrutinizing the Chicago-based company’s supplies of slivered onions and beef patties as they try to determine the cause of the outbreak, the company said.

The U.S. Department of Agriculture said late on Wednesday that the onions used were the likely source of the illness, though one of its state partners is testing samples of the beef for E. coli.

The company’s stock closed down 5.1 per cent at $298.57 on Wednesday. Shares hit an intraday low of $290.88.

‘Very serious disease’

The E. coli O157:H7 strain that led to the McDonald’s outbreak is the same as a strain linked to a 1993 incident at Jack in the Box that killed four children. It can cause “very serious disease,” especially for the elderly, children and people who are immunocompromised, said Shari Shea, director of food safety at the Association of Public Health Laboratories.

McDonald’s suppliers test their products frequently and did so in the date range the CDC gave for the outbreak, and none of them identified this E. coli strain, company spokespeople said.

U.S. food safety attorney Bill Marler, who represented a victim in the Jack in the Box outbreak, said this is a relatively large and serious outbreak for which McDonald’s will face “a lot” of liability for the contamination.

“We’re still in the early stages of how McDonald’s is going to handle this,” he said. “But getting the supplier of the onions out – if they’re confident that’s the source of it – is going to be really important.”

Marler said that in the 1990s, he dealt almost exclusively with lawsuits involving contaminated beef, but in recent years E. coli outbreaks have been almost solely limited to produce contaminated through irrigation or flooding with feces from nearby cattle. E. coli is a natural pathogen in the guts of cows.

Jim Lewis, who was a franchisee in New York City for more than 30 years before exiting the system in 2019, said when E. coli became a major concern decades ago, McDonald’s was adamant about its protections for its beef supply chain.

“They were over the top to make sure it would never happen,” he said.

He said McDonald’s has historically been the “safest, strongest food chain in the world. So this is devastating to us internally.”

Analysts flagged the outbreak as a potential black eye for McDonald’s ahead of earnings.

“The worst-case scenario is if more people get sick or multiple ingredients or suppliers are impacted, which could be a longer-lasting issue that could also tarnish the brand,” CFRA Research analyst Arun Sundaram said.

During an appearance on NBC’s “Today” show on Wednesday, McDonald’s USA chief Erlinger pointed to the company’s steps to quickly pull the Quarter Pounder from its menu in areas where the outbreak occurred.

“Given the recent events of the past 24 hours, our priority is to reinforce the confidence of American consumers,” he said.

In the past, two notable E. coli outbreaks – at Chipotle Mexican Grill in 2015 and Jack in the Box in 1993 – significantly hurt sales at those chains.

Chipotle took a year-and-a-half to stabilize, while Jack in the Box sales declined for four straight quarters, Raymond James analyst Brian Vaccaro said.

Chipotle shares fell nearly 50 per cent during the 2015-2018 period when cases of norovirus infections were reported after the E. coli outbreak.

Analysts said McDonald’s fourth-quarter sales could experience some pressure from the outbreak, but it was too early to say whether it would be worse than the previous two E. coli cases.

— Additional reporting by Aishwarya Venugopal in Bengaluru and Julie Steenhuysen and Tom Polansek in Chicago

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