Demand For Packaged Food Drops In US: Has 'Miracle' Drug Ozempic Got Something To Do With It?

As the cost of living in the U.S. keeps soaring, Americans seem to be shunning comfort food, despite the necessity to eat. Notably, packaged-food manufacturers are witnessing a significant drop in their product sales. This shift in consumer behavior is sparking curiosity and concern among industry watchers.

According to a report from Barron’s, TD Cowen analyst Robert Moskow detailed three primary factors behind the declining sales volumes of packaged-food makers. Moskow warned that this downturn could persist in 2024 unless firms take substantial measures to reduce prices.

First up, the high prices of food products have led consumers to economize their shopping habits. Moskow noted that consumers are “wasting less, resisting impulse purchases, and trading down to cheaper options.”

This trend is seemingly backed by the 1.8% drop in grocery store volumes over the past 52 weeks.

See Also: Walmart Reports ‘Slight Pullback’ In Food Demand As ‘Miracle’ Weight-Loss Drug Ozempic Gains Popularity

Big packaged-food companies, including Conagra Brands (NYSE:CAG), General Mills (NYSE:GIS), Kellanova (NYSE:K), and Kraft Heinz (NASDAQ:KHC), have experienced an even greater decline. Their volumes have fallen 6% or more in the 52-week period ended September 2023.

Moskow attributes 40% of the volume loss to consumers shifting to fresh produce, meat, deli, and bakery products. The remaining 10% is due to market share lost to private label and emerging brands, which have seen increased sales as consumers seek less expensive options.

However, he doesn't see evidence that increased use of drugs like Ozempic for diabetes management and ‘miracle’ weight reduction is behind volume declines, even though it holds the potential to do so in the future.

Should cooler weather, holiday shopping, and improved merchandising fail to boost sales, Moskow believes that these firms will need to make substantial price investments to reverse the trend.

Read Next: Experts Weigh In On Ozempic’s Evolving Side Effects And How To Handle Them

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