‘It’s Overblown’: Beer Stocks Take Plunge After Major Corporation Warns Ozempic, Weight Loss Drugs Could Affect Sales
(Photo: Pradnyal Gandhi/Unsplash)
Recent comments from Walmart Inc. suggest corporations are seeing a shift in consumer shopping due to Ozempic, Wegovy and other drugs used for weight loss. The fears of the appetite-suppressing drugs impacting people’s purchasing habits sent shares of beer and other alcohol companies sliding. However, the CEO of Constellation Brands thinks the effects of new medications have been “overblown.”
The company behind Model and Corona beer, Constellation Brands’s stocks dropped last Friday and Walmart might have something to do with it.
“When Walmart mentioned it, I think the concept of weight loss drugs having a broader effect on a wide range of companies really took hold in investors’ minds,” said Steve Sosnick, chief strategist at Interactive Brokers, as reported by Bloomberg.
Prescription drugs like Ozempic and Wegovy are the main culprits in this wave of weight loss miracle cures. Although weight loss was not the purpose of Ozempic it has been gaining popularity for its pound-shedding side effects even though it was originally made for type 2 diabetics.
One of the culprits of changing consumer habits is likely due to inflations negatively affecting people’s discretionary income. Despite this ongoing problem, Walmart’s warning appears to have ignited the fuse on another round of share selling.
While the popularity of weight-loss medications has exploded, it’s still unclear how the drugs will affect people’s desire to drink alcohol. CEO of Constellation Brands, Bill Newland isn’t convinced medications like Ozempic will hurt the alcoholic beverage industry to a huge degree.
“We’ve never had a consumer bring that topic up with us. And some of it is the whole social aspect of alcohol consumption. A lot of it is engaging with other people. There’s a social element to it. And while there is a subsegment of that population that’s interested in betterment…as we talked earlier, that’s part of the reason why Corona Non-alcoholic has done so well…the majority of people are not as concerned when they bring an alcoholic beverage into their mix of what they’re consuming, as they would in some other areas. We think, certainly, for our sector, it’s overblown,” Newland told Yahoo! Finance.
The drugs work by curbing people’s appetites and in some cases, some users indicated on Healthline that these types of drugs can alter the way food tastes and can strip people of their desire to go out for food and drink. For the beer industry, this could be bad for business since users’ thirst for social drinking may decline significantly.
Some argue that weight management products like shakes and frozen meals may be more in danger of losing customers if effective weight-loss drugs make these items irrelevant. For the moment, alcohol appears safe in the face of new medications.
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