US Markets
Tuesday, May 21st, 2024 4:00 pm EDT
Key Points
- Launch of Vital Pursuit: Nestle is launching a new frozen-food brand, Vital Pursuit, aimed at consumers using GLP-1 drugs like Ozempic and Wegovy, with products designed to meet their specific nutritional needs.
- Market Opportunity: The popularity of GLP-1 drugs has surged, with significant endorsements and rising usage. Nestle sees an opportunity to cater to this growing market as these consumers typically prefer protein-rich and less sugary foods.
- Health-Focused Strategy: Nestle has been shifting towards health-conscious products, evident from its past divestment of its U.S. candy business. Vital Pursuit will offer nutrient-packed items and be strategically marketed, particularly through social media, without direct references to GLP-1 medications on packaging.
Nestle is launching a new frozen-food brand called Vital Pursuit, targeting consumers who use GLP-1 drugs like Ozempic and Wegovy. These weight loss and diabetes medications have gained significant popularity, partly due to endorsements from celebrities like Oprah Winfrey and Elon Musk. According to a survey by the health policy research organization KFF, about one in eight U.S. adults have used a GLP-1 drug, with around 6% currently on these treatments. Research from Morgan Stanley suggests that the number of U.S. consumers taking these medications could reach 31.5 million by 2035, or 9% of the total population.
As the use of GLP-1 drugs rises, there is growing concern among investors about the impact on food and beverage companies and fast-food chains, since users of these drugs typically eat less frequently, crave fewer sugary and fatty foods, and prefer more protein. For example, Walmart’s U.S. CEO John Furner noted that customers buying GLP-1 drugs from its pharmacies tend to purchase less food with fewer calories.
Despite these challenges, Nestle sees an opportunity with Vital Pursuit. Steve Presley, Nestle’s North America CEO, explained that the diet industry has been declining, and the new brand provides consumers with a tool to gain confidence and success in their health journeys. Vital Pursuit’s initial lineup includes 12 frozen items such as bowls with whole grains or protein-packed pasta, sandwich melts, and pizzas, all priced at $4.99 or under. These products will feature essential nutrients like protein, calcium, or iron, with some gluten-free options available.
Although the packaging for Vital Pursuit will not directly mention GLP-1 medications, Nestle plans to connect the brand to these drugs through social media campaigns. The product line is expected to be available in freezer aisles by the fourth quarter.
Nestle has been shifting its focus toward health-conscious consumers over recent years. In 2018, the company sold its U.S. candy business, which included brands like Butterfinger and Crunch, to Ferrero for $2.8 billion. Currently, its food business, which includes Stouffer’s and Toll House, makes up only 14.5% of its U.S. sales. Although Nestle already owns Lean Cuisine, a brand founded in 1981 to offer healthier frozen meal options, the new Vital Pursuit brand is specifically designed to meet the nutritional needs of GLP-1 users, who may require more protein to combat muscle loss associated with the medication.
Nestle’s North America CEO emphasized that consumer research indicates the importance of providing specific nutrients and macros to help maintain health during GLP-1 treatment. Despite these initiatives, shares of Swiss-based Nestle have dropped 16% this year, reducing its market value to $278 billion. The company anticipates slower global growth this year as inflation affects consumer purchasing behavior.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/21/nestle-to-launch-vital-pursuit-frozen-food-for-glp-1-users.html
