The Hershey Company reports ‘seeing a mild year-on-year impact’ on its business from GLP-1 drugs. The global chocolate giant’s Chief Executive Officer and Chairman, Michele Buck, commented on the relationship between GLP-1 drugs and confectionery in Hershey’s recent Third Quarter 2024 Earnings Q&A Session, held on 7th November 2024.
Glucagon-like peptide-1 receptor agonists (GLP-1RAs), to give them their official medical term, are a class of drugs used to treat type 2 diabetes and obesity. With today’s media and celebrity culture shining a spotlight on GLP-1 drugs, they are closely linked to weight loss drugs like Ozempic and Wegovy, along with other perhaps lesser-known names like Mounjaro and Rybelsus.
Hershey experiences GLP-1 effect
During Hershey’s conference call, Alexia Howard of investment company Bernstein asked about the potential impact of GLP-1 drugs on the company: “How are you exploring the needs of these patients? How should we respond to that? Are you seeing any effect on chocolate sales right now, and what does the future look like for this trend?”
Hershey’s CEO and chairman, Michele Buck, replied: “We’re seeing a mild year-on-year impact. I’d say it’s consistent with what we’ve previously shared and in line with our expectations. Overall, I’d describe it as more of a gradual effect.”
Manufacturers in the confectionery industry, who conceptualise and formulate around permissible indulgence, may worry about the knock-on effect the rising presence of GLP-1 drugs will have on sales and confectionery consumption.
However, Hershey’s results indicate the hit has been less than what would perhaps have been expected.
Buck added: “We continue to see multiple sources of data validating that the consumers on those drugs aren’t eating disproportionately less of our category,” Buck continues, in the Q&A session following the company’s Q3 results.
Knowing what consumers want
As we continue through Q4 and approach 2025, the ongoing growth and development of GLP-1 drugs will see confectionery companies continue to research these medications to keep on top of how they affect sweet treat sales.
While confirming it’s not come as a surprise, understanding how GLP-1 drugs will impact consumer behaviour is on Hershey’s agenda. “It’s in line with what we expect, and we are carefully monitoring that behaviour, how it’s evolving and certainly understanding what the needs are of those consumers so that as we continue to evolve our portfolio,” says Buck. Confirming that Hershey is always doing this over time, Buck adds the company is “evolving it in a way to make sure that we have the right offerings for those consumers as well”.
“We’re seeing a mild year-on-year impact, which aligns with our expectations,” a spokesperson for The Hershey Company confirmed in a separate statement to Confectionery News.
“We are carefully monitoring this behaviour as we continue evolving our portfolio so that we have suitable offerings for our consumers.”
What’s 2025 got in store?
GLP-1 drugs and their impact on our relationship with food will be prominent in global food trends in 2025. In its Global Food and Drink trends for 2025, market intelligence company Mintel reveals that ‘Fundamentally Nutritious’ will be a leading trend next year, honing in the increasing focus on ‘food as medicine’ trend.
Mintel says that the emergence of weight-loss medications like Ozempic will redefine consumer perceptions of ‘food as medicine’. Formulations will then centre on adding functional ingredients to products that meet daily essential nutrient needs.
According to Mintel data, more than a fifth (21%) of German adults actively trying to lose or maintain weight have used continuous glucose monitoring to manage their weight in the year to April 2024. In addition, in Indonesia, for example, over two-thirds of consumers (67%) have tried or would be interested in personalised food or drink to match their needs, including recommendations based on their diet or activities.
Consumer behaviour and preferences are shifting, impacting the formulations confectionery companies are developing. Research indicates that GLP-1 weight loss users indicate food spending has reduced six times faster than non-GLP-1 households.
The business consulting firm Clarkston Consulting examined GLP-1 drugs’ impact on the food industry. According to the firm, product launches and brand deals high in protein and health-consciousness are emerging to reflect consumer dietary preferences. Packing protein into their new launches has been an increasing focus of confectionery product development in 2024, with consumers seeking functional sweet treats that cater to the better-for-you healthier alternatives trend.
Next year, attention will be on simplifying health claims and focusing on the nutrients they contain. For confectioners, this may mean highlighting the products' protein, fibre, vitamins and mineral content levels to balance providing permissible indulgence with health-conscious considerations. Clarifying content on product claims may also attract on-the-go shoppers who question the functionality of ingredients in items marketed as better-for-you or healthier alternatives.