Shares of fast food and food chain companies are affected by several factors, including health and nutrition trends.

As obesity and diabetes treatment techniques advance, public interest may shift toward healthier foods and better dietary choices.

This change may affect consumption patterns and thus the performance of the shares of these companies.

Last week, US businessman Jim Cramer called on investors to be wary of some food and drink stocks as investors are attracted to companies that make the newly popular GLP-1s and weight loss and diabetes drugs such as Mounjaro and Zepbound.

“Stay away from these food and beverage stocks because there will come a day when someone finally admits they were hit by GLP-1s, and that will send every stock in the group down,” he advised.

  • But there are other variables that could contribute to poor sales of food and beverage companies.

    While many in the industry deny that GLP-1s hurt sales and change consumer behavior.

  • PepsiCo admitted its snack business was suffering, but attributed the declines to the consumer having less disposable income.

Cramer added that alcoholic beverage companies are also seeing declines, but he said this could also be due to inflated prices or perhaps due to consumers choosing to use more cannabis products.

He admitted that it is difficult to predict how these drugs will affect food stocks in the future, but he said that they will definitely change the market.

Corporate gains

For his part, President of the Egyptian Society for the Right to Medicine, Mahmoud Fouad, confirmed that:

  • The largest food and fast food chains in the world are witnessing a decline in profits due to the rise in the proportion of obese patients, including McDonald's. In contrast, the shares of obesity and diabetes drug companies are rising.

  • There are major companies in the sector that benefit from this. Among that list is the American company Eli Lilly and the Danish company Novo Nordisk, both of which have recently developed obesity treatments, which has led to an increase in their market value.

  • These companies are superior to international companies such as Pfizer and Gilead Sciences.

He explained that Novo Nordisk's sales, for example, last year amounted to more than $32 billion, and Eli Lilly's sales exceeded $2 billion, especially thanks to the new obesity drug "Monjaro."

He pointed to the World Health Organization report issued in 2021, which highlighted obesity diseases as the highest after heart disease and diabetes, which are diseases closely linked to obesity diseases.

  • The global pharmaceutical market has witnessed significant growth in recent years.

  • For 2023, the total global pharmaceutical market is estimated at US$1.6 trillion.

  • This represents an increase of more than $100 billion compared to 2022, according to statista data.

Weight loss drug stock momentum

For his part, the CEO of VI Markets, Ahmed Moati, explained in exclusive statements to the “Eqtisad Sky News Arabia” website that:

  • The US stock market mainly controls the momentum achieved by weight loss and diabetes drugs in Europe and the United States.

  • But the trend towards weight-loss drugs does not affect the stocks of food companies;

    The two have the same demand, in light of the increasing population density, and with the increase in corporate profits from fast food.

  • Although companies such as McDonald's and KFC were affected by the boycott in the Middle East, most of the company's branches achieved decent profits, as he described it.

Moati considered that the trend towards weight-loss drugs does not affect food companies or fast food chains, and that Wall Street achieves daily record levels despite the tightening of monetary policy (which does not reflect the presence of a crisis).

Declining revenues

The economist, Ali Al-Idrissi, agreed with him, who stated that:

  • The momentum achieved by weight-loss and diabetes drugs in Europe and the United States will not affect food companies and popular fast food chains.

  • These companies' sales may be affected by other factors, such as recent geopolitical conflicts and calls to boycott certain products.

  • Weight loss drugs have been around for a long time, and have had little impact on food and fast food companies.

In exclusive statements to the “Eqtisad Sky News Arabia” website, Al-Idrissi identified two main reasons for the impact on the revenues of some food companies:

  • The first reason is the conflicts and boycott campaigns in some Arab countries and countries around the world.

  • The second is inflation and its unprecedented rises in the world, which has made individuals rearrange their priorities.

He pointed out that this applies to all countries of the world, but it is subject to proportionality from one country to another.

Those with high incomes do not have a problem, while those with middle and low incomes face a difficult problem, and they are a large segment globally.

The economist confirmed that the demand for stocks is linked to the extent of the profitability of these companies, considering that achieving profits or losses is linked to global markets. It is possible that weight loss medications have witnessed an increase in demand for them as a result of the increase in the global population, the imitation and imitation of social media, and the development of propaganda and advertising, from They could be great attractions, but on the other hand, they did not affect the companies on the other side, such as fast food companies and chains.