Ozempic vs Krispy Kreme: Wall Street firm bets weight-loss drugs won’t beat doughnut sales
What changes have food executives noticed in consumer habits due to the popularity of weight-loss drugs?
Food executives have noticed changes in consumer habits due to the popularity of weight-loss drugs, particularly GLP-1 drugs such as Ozempic and Wegovy. These drugs have been found to significantly reduce appetite and calorie consumption, leading to shifts in consumer food choices. As a result, food executives have observed a decline in the consumption of sugary drinks, baked goods, and salty snacks. Fast food restaurants, known for their high-calorie offerings, are perceived to be at risk, while fast casual brands with healthier offerings and restaurants with flexible menu options could stand to benefit.
What reasons did Truist Securities provide for upgrading Krispy Kreme's stock from hold to buy?
Truist Securities upgraded Krispy Kreme's stock from hold to buy for several reasons. Firstly, analyst Bill Chappell believes that the negative impact of glucagon-like peptide 1 (GLP-1) drugs on snack food companies has already been reflected in Krispy Kreme's current valuation. Secondly, Chappell notes that the $69 billion U.S. indulgent snack market continues to grow, despite the popularity of healthy-living, low-sugar diets. Lastly, Krispy Kreme is considered "more sheltered" than other areas of the indulgent sweet market, with the company having plenty of opportunities to expand its market share and consistently grow sales by a moderate single-digit to high single-digit percentage over the next few years.
How has the $69 billion U.S. indulgent snack market responded to trends in healthy living and low-sugar diets?
The $69 billion U.S. indulgent snack market has continued to grow despite trends in healthy living and low-sugar diets. According to Truist Securities analyst Bill Chappell, Americans want to eat healthy, but they also enjoy their sweets. This is reflected in the continuous growth of the indulgent snack market, which offers products such as doughnuts, cakes, and other sweet treats. The market has been able to maintain its growth by providing occasional indulgences for consumers who otherwise follow healthy-living, low-sugar diets.