With the rise of appetite suppressants like Ozempic and other GLP-1 meds, many are betting on the downfall of junk food. Could healthy home meal kits benefit from this trend?

Getting home exhausted and cooking a healthy meal can be extremely challenging. No wonder Australians spend between $51 and $72 on takeout every week, on average, while Kiwis drop a quarter of their food budget on restaurants and takeout.

Unsurprisingly, this also leads to unhealthy eating habits, with more than one in every five Australians eating fast food at least once a week. Our junk food cravings are a global health problem, with obesity levels constantly increasing.

Enter GLP-1 drugs like Novo Nordisk’s ($NVO) Ozempic. These drugs, also known as glucagon-like peptide-1 receptor agonists, play a crucial role in regulating food intake and energy metabolism, consequently decreasing body weight. They work by curbing hunger and cravings for unhealthy food.

Major retailers like Walmart ($WMT) are even saying that food sales are slowing down because of Ozempic. Some investment researchers, like Barclays last week, suggest that investors should short junk food companies, as their sales could suffer heavy losses.

That’s not to say every food company is doomed. Should our sugar and fat cravings drop, our meal choices could become more rational, benefitting healthy eating options – such as home meal kit producers like HelloFresh and Marley Spoon.

Promoting the consumption of fresh and balanced meals at affordable prices, with ingredients delivered straight to your door, meal kit companies appeal to customers pressed for time but unwilling to compromise their nutrition. The home meal kit industry already generates US$15.5b in annual revenue, and is expected to grow to US$24.7b by 2027.

There are weaknesses to address, though: meal kit companies compete on price, convenience and variety with regular grocery stores. Large retailers like Walmart ($WMT), Target ($TGT) and Costco ($COST) in the U.S. have an advantage because of the volume of product they handle daily, which enables them to negotiate better prices with suppliers. 

Additionally, meal kit companies often offer discounts to new customers, which can lead to customer churn when the discounts go away. Around 90% of meal kit customers choose not to renew their subscriptions once they expire after a year. With revenues plummeting, even leading player Blue Apron ($APRN) was taken private in the last week of September – after a 99% drop in share price since its 2017 IPO – due to unfulfilled promises of profitability.

If meal kit companies can sort out these challenges, GLP-1 meds might turn out to be the secret ingredient – undermining the competition by taking out takeout.


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