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Business News/ Opinion / Views/  Weight-loss drugs may reduce the appeal of alcoholic drinks
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Weight-loss drugs may reduce the appeal of alcoholic drinks

New findings show that these pills tend to put people off drinking

The potential threat of weight loss drugs to alcohol demand comes as the alcohol industry is flying high on pandemic-driven growth and renewed interest in premium spirits, wine and beer. (HT_PRINT)Premium
The potential threat of weight loss drugs to alcohol demand comes as the alcohol industry is flying high on pandemic-driven growth and renewed interest in premium spirits, wine and beer. (HT_PRINT)

The US alcohol industry has been thriving despite a streak of threats: the legalization of marijuana, a trade war with China that hampers US exports, the rise of the sober-curious movement. Now a new risk is here: weight loss drugs.

Eli Lilly’s Mounjaro and Novo Nordisk’s Ozempic and Wegovy have gained popularity as a fast way to lose weight, thanks to celebrities such as Khloe Kardashian and Elon Musk. Most people who take GLPs shed at least 5% of their body weight and, depending on the therapy, over half can lose as much as 20%. Newer drugs promise to push those numbers even higher.

But they don’t only curb food cravings. Weight-loss drugs also seem to dampen the rewards of addictive substances, be it nicotine, opioids or alcohol. Scientists have shown that rats, mice and monkeys drink less when given certain GLP1 therapies and are studying whether the same effect can be seen in humans. Early readings from Wall Street analysts suggest that could have an impact on the alcohol industry.

A survey conducted by Morgan Stanley’s AlphaWise research unit found that people consumed 62% less alcohol while on weight loss drugs. Among those drinking less, 22% said they stopped alcohol entirely. Meanwhile, the firm expects the number of people taking obesity drugs to grow nearly fivefold over the next 10 years to about 7% of the US population. By 2025, it estimates an overall 1.8% reduction in alcohol consumption from such drugs. For perspective, the US alcohol industry amounted to $197 billion in 2022, by IWSR data. A reduction of almost 2% could amount to a $3.5 billion loss in sales.

Those are just estimates. No one has a true handle yet on the long-term impact of these drugs. But specialists say many patients who take them mention an alcohol aversion, and even those who still drink socially consume less. The desire simply isn’t there. Feelings of fullness take over.

Take the experience of Shannon Lee, a digital marketing professional who says that before going on Mounjaro, she’d drink about four glasses of wine or beer each week. But any craving for alcohol pretty much vanished after her first dose, and she can count on two hands the number of drinks she’s had in her 15 or so months on the drug. “It’s rendered me speechless," she says. “I looked forward to drinking beer, going out to dinner with friends and having a glass of wine. Now, I’m the designated driver because I have no interest..." That could create a strong draw for people trying to manage their weight while also recognizing they’ve slid into unhealthy drinking habits. Recent data show women in mid-life are increasingly struggling with alcohol; a recent poll by KFF showed that the same group is more aware of and more interested in trying GLP1s than men.

The potential threat of weight loss drugs to alcohol demand comes as the alcohol industry is flying high on pandemic-driven growth and renewed interest in premium spirits, wine and beer. Brown Forman, which produces spirits including Jack Daniels whisky, increased its annual revenues between 2019 to 2023 by 27% to $4.2 billion. In the last four years, London-based Diageo has seen its tequila business quadruple, surpassing its vodka sales, CEO Lavanya Chandrashekar told investors in an earnings call earlier this month.

Alcohol companies should redouble efforts to test new products as consumers become more mindful of health. Nearly every large company has dabbled with non-alcoholic or low-calorie options such as Boston Beer Company’s low-calorie Truly Hard Seltzer or Molson Coors’ mocktail line Roxie.

There are some caveats. For starters, many forecasts optimistically assume significant and lasting uptake of the drugs. While it’s true GLP1s must be taken chronically for maintenance, a major unknown is whether people are willing or can afford to be on them for life—or even for more than a year or two. Insurance coverage for the treatments has been spotty, and while increasing evidence of their health benefits could open up access for some, consistent, affordable access will remain a near-term barrier.

And these drugs will not necessarily change the way people eat or drink, but the amount they eat and drink. For food and alcohol companies, that might mean doubling down on premiumization—charging more for a higher quality product in a smaller container.

Alcohol companies aren’t facing a cliff. Even though consumers are increasingly moderating their alcohol consumption, they’re choosing low-alcohol drinks over non-alcoholic ones, according to IWSR. Alcohol will likely continue to be a part of ritual gatherings for meals and time spent with friends and family. It just might play a smaller part. ©bloomberg

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Published: 06 Sep 2023, 10:18 PM IST
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