In partnership with

NOTE: We predicted major acquisitions would start taking place in the next 5 years due to consumer’s shifting tastes towards healthier products with pronounceable ingredients. The deal was announced when Ahmed was recording last week’s video.

Americans’ chronic battle with obesity is being addressed in the most American way possible: a prescription drug.

Years of nutrition policy be damned, Ozempic and Wegovy are delivering better results than lifestyle changes ever could. And their maker, Novo Nordisk……is getting paaaaaid.

So, what’s a junk food company to do?

Let’s hit the sponsor and get on with it.

GLP-1: The future that nutrition policy wishes it created

Morgan stanley projects that sales of soft drinks, salty snacks, and alcohol could drop off ~45 by 2035, with as much as 10% of the population taking some sort of GLP-1 medication.

That’s 30 million people.

30 million people are about to make much better decisions in the supermarket.

So, What’s a “junk food” company CEO to do?

So, 30 million of your most profitable customers disappearing. What would your business have to do in order to stay afloat if 30 million people are on a path to make smarter decisions in the grocery store?

Well, you could say the following:

1. We’re going to introduce more sugar free options

2. We’ll re-design packaging to be more economical for smaller consumption

These are the typical uninspired choices that will appease shareholders in the short term.

But this is a deeper problem than that. You will have a fundamental shift in consumer thinking for the most profitable segment of customers. This will require a deep shift in the way food and beverage companies think about new product offerings.

A hard pivot: Normal Ingredients

This is the biggest opportunity in years for F&B companies. 

Because it gives you the opportunity for true differentiation.

It’ll present opportunities to compete outside of the snack aisle. To stop putting your product next to another competitor with the same ingredients.

You get to actually differentiate.

And it starts with this simple strategy: If an ingredient as more than 2 syllables, get rid of it.

Figure out your supply chain to deliver real ingredient product at scale, and get rid of anything that a customer has a hard time pronouncing.

You’re about to have a population that’s driven by rational choice rather than toxic impulse. The back of the label starts getting increasingly important once a person stops letting intrusive thoughts win.

This all sounds really hard and time consuming. Yes, change is hard.

BUT…

Real time events have taken place due to the long term effects of consumers wanting to shift to healthier products.

1. Nestle sold off its ice cream business - probably because it saw the top of the market in that category and got aggressive by getting out.

2. PepsiCo JUST agreed to buy Siete foods last week 1.2 billion. We predicted something like this would happen in the next 5 years, and it got started early.

None of this is investment advice, btw.

Have a great week!

Ahmed and Peter