Stocks in the food and beverage industry experienced their most challenging week since May 2022, further extending the declines seen in the preceding weeks.
The First Trust Nasdaq Food & Beverage ETF FTXG plummeted by over 5% this week, marking its third consecutive week of losses and the ninth negative week out of the last ten.
The industry gauge has now fallen to levels last observed in February and November 2020, returning to pre-pandemic levels.
Beyond the common factors, such as Treasury yields affecting the broader stock market over the last month, the food and beverage sectors face a more substantial bearish pressure due to concerns regarding weight-loss drugs like Ozempic and Wegovy, manufactured by Novo Nordisk A/S NVO.
These concerns revolve around the potential to alter consumption patterns and reduce people’s inclination to consume high-calorie foods and beverages. Earlier this week, Walmart Inc. WMT reported a decline in shopping demand attributed to the use of weight-loss and appetite-suppressing drugs.
Chart: Food, Beverage Stocks Post Their Worst Week Since May 2022
Novo Nordisk Drugs Could Push Down Food Market: Analyst
“The launch of new highly effective drugs (GLP-1 agonists) for obesity by Eli Lilly & Co. LLY and Novo Nordisk could be one of the biggest in the history of Biopharma,” according to a Friday Bank of America note
The team of analysts, led by Geoff Meacham, said the substantial weight loss observed with GLP-1s should drive strong demand. Yet GLP-1s also have downstream effects, such as reducing appetite and curbing cravings and addictive behaviors.
The market impact of these effects is less clear, but they could potentially reshape consumer behavior in the long term, benefiting some industries while posing higher risks to others, BofA said.
BofA analysts suggest the highest risk of reduced consumption due to the effects of weight-loss drugs pertains to alcohol, snacking in comparison to regular meals and non-alcoholic beverages. Additionally, weight management products (such as shakes and frozen meals) could also be at risk if their intended purpose becomes obsolete.
According to Bank of America, intermittent snacking may encounter more significant headwinds compared to meal occasions such as lunch and dinner, and, in this context, at-home consumption is likely more vulnerable than out-of-home consumption.
Food Stocks To Watch In The Ozempic Era
- The Hershey Company HSY
- PepsiCo, Inc. PEP
- Mondelez International, Inc. MDLZ
- Bellring Brands, Inc. BRBR
- Conagra Brands, Inc. CAG
- Constellation Brands, Inc. STZ
- Molson Coors Beverage Company TAP
- Utz Brands, Inc. UTZ
- Campbell Soup Company CPB
- Kellanova K
- The J.M. Smucker Company SJM
- The Coca-Cola Company KO
- Keurig Dr Pepper Inc. KDP
- Brown-Forman Corporation BF
- Nestlé A.G. NSRGY
Excluding BellRing Brands, all of these stocks are trading lower this week and for the month. The poorest performer is the newly established Kellanova, which spun off from WK Kellogg Co. KLG and saw a significant 15% decline.
Notably, soft-drink industry giants like The Coca-Cola Company and PepsiCo both experienced a substantial 5% drop, marking their worst-performing week in over a year-and-a-half.
| Name | Market Cap | Price Chg % (5D) | Price Chg % (1M) |
|---|---|---|---|
| Nestlé S.A. | $300.95B | -0.81% | -1.25% |
| The Coca-Cola Company | $230.34B | -4.85% | -9.38% |
| PepsiCo, Inc. | $221.38B | -5.09% | -7.96% |
| Mondelez International, Inc. | $86.34B | -8.55% | -8.93% |
| Constellation Brands, Inc. | $43.78B | -5.15% | -7.89% |
| Keurig Dr Pepper Inc. | $42.04B | -4.70% | -9.38% |
| The Hershey Company | $39.99B | -2.26% | -7.05% |
| Brown-Forman Corporation | $27.41B | -1.37% | -10.51% |
| Kellanova | $17.26B | -15.27% | -14.97% |
| Molson Coors Beverage Company | $12.82B | -6.81% | -4.47% |
| Conagra Brands, Inc. | $12.68B | -3.19% | -8.62% |
| The J. M. Smucker Company | $11.84B | -5.65% | -17.83% |
| Campbell Soup Company | $11.74B | -4.07% | -4.11% |
| BellRing Brands, Inc. | $5.50B | 1.41% | 2.35% |
| Utz Brands, Inc. | $1.71B | -9.46% | -16.71% |
Chart: $KO And $PEP Suffer Worst Week In Over 1.5 Years
Read now: Novo Nordisk’s Wegovy Success Uplifts Denmark’s Economy And Reputation, But With Caution
Photo via Shutterstock.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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