Ozempic is costing grocery stores billions

Grocery store

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Suzanne Blake

By Suzanne Blake

Reporter

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GLP-1 medications, including Ozempic and Mounjaro, are already costing grocery stores billions.

According to a new report from Big Chalk Analytics, GLP-1 users have cut $6.5 billion from U.S. grocery spending, and the popularity of the weight loss and diabetes medications appears to only be growing.

Why It Matters

The use of weight-loss medications called glucagon-like peptide-1 (GLP-1) receptor agonists has skyrocketed in recent years.

What To Know

While GLP-1 medications are already reportedly costing grocers $6.5 billion, the impact could be even costlier in the years to come as 8.3 percent of Americans are planning to start the medications, according to the new Big Chalk survey of more than 4,500 consumers.

If this happens, the survey projects losses as much as an additional $4.4 to $10.8 billion.

"The changes being seen in grocery stores are the result of people making better choices about food –less ultra-processed food and possibly less food overall," David Navazio, CEO of health care product company Gentell, told Newsweek.

Several types of products have seen their purchase rates go down, from cereal and soft drinks to lunch meats.

Currently, an estimated 11.2 percent of U.S. adults are on GLP-1 medications, but roughly 20 percent could soon be on the medication in just 12 months.

"It's one of the fascinating business 'side effects' of medications like Ozempic that grocery stores are seeing a dip in business," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.

"The idea is these medications suppress hunger, which is causing consumers to purchase food less. And while there is certainly some truth to this, it's too soon to call it a long-term trend. Financially, it can be seen as a good thing for money-strapped customers who can reduce their grocery bills along with their waistlines. Whether or not this economic impact is a lasting one remains to be seen."

So far, the medications have triggered grocery volume losses of 1.2 to 2.9 percent, with dollar sales dropping between 0.9 and 2.3 percent, depending on the category, according to the report.

GLP-1 users were 65 percent more likely to buy smaller packs of cereal and 48 percent more likely to purchase smaller packs of lunch meats. This extended to soft drinks as well, with those on the medication 36 percent more likely to opt for the smaller sizes.

"The opportunity for grocery brands is twofold: A continued migration toward better-for-you products—plus an emphasis on smaller pack sizes—are ways CPG brands can adapt to these changing consumer demands for volume," Rick Miller, partner and marketing effectiveness practice lead at Big Chalk, told Newsweek.

What People Are Saying

Rick Miller, partner and marketing effectiveness practice lead at Big Chalk, said in a statement: "GLP-1s have crossed the household-penetration threshold where their impact on grocery volumes and dollar sales can no longer be ignored. We're past anecdotes. This is measurable, structural change. Brands and retailers must rethink assortment, pricing, and promotion for a shopper who is literally consuming less."

David Navazio, CEO of health care product company Gentell, told Newsweek: "We will see changes in product selection as a result of the changes in people's buying habits, with an emphasis on whole foods, produce, lean meats."

For grocery stores, it may take time to adapt. But the change is undoubtedly good for the country as a whole that our population is becoming healthier."

Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "Like anything else, this comes down to supply and demand. If grocery stores are seeing a drop in volume, the next step would usually be lower prices. That's not what we're seeing. Grocery prices were up another 0.3 percent in June, according to the latest CPI data. So if grocers are losing, I'm not quite sure who's winning yet."

Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "At any given point in time, there is one part of the economy that is booming at the expense of another. This is just the normal oscillation around economic equilibrium. In very general terms, being less obese is healthier, and I think it is a good thing overall to having a healthier population. Grocery stores will slowly adapt to new eating and shopping habits, which will have knockoff effects in other sectors, while some parts of the economy will see increased spending that can be attributed to GLP-1 use."

What Happens Next

Beyond the economic impacts, the long-term implications of GLP-1 medications on health are still being studied.

A recent study discovered a new link between taking GLP-1 drugs and elevated risk of pancreatitis and kidney conditions, including kidney stones.

GLP-1 medications are also tied to a higher risk of digestive problems, including nausea, vomiting, diarrhea, and even stomach paralysis in rare cases.

For the business economics of grocers reacting to the uptick in GLP-1 usage, prices have not adequately shifted yet, Thompson said.

"America has an obesity problem. If these drugs are helping people eat less and live healthier lives, that's a net positive," Thompson said.

"But in a capitalist economy—if Adam Smith's invisible hand is really at work—we should be seeing food prices and health care costs fall also. That's not happening. Health care continues to rise at an alarming rate, and food prices are still climbing. Long term, we might expect some price relief, but we're not there yet."

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