Nestlé Aims to Climb on Weight-Loss-Drug Gravy Train

As sales of blockbuster weight-loss drugs like Wegovy soar, some giants of the food industry want to get in on the action.

Nestlé, for example, is working on products to supplement the weight loss drugs, which suppress appetite, its chief executive officer told investors in a recent briefing. The Swiss food company is known for chocolate, candy and snacks like KitKats and Hot Pockets but also owns coffee and pet food brands.

“For the time that patients spend on these drugs and after, we are already developing a number of companion products," CEO Mark Schneider told investors on Thursday. “These innovations are right in our wheelhouse, where we can bring our deep understanding of nutritional science and appropriate supplementation to the table.” 

The products will be designed to help with the loss of lean muscle mass and rapid regaining of weight, he said.

Moves like Nestlé’s are one reason jittery investors should not lose faith in food-centered businesses as weight-loss drugs gain in popularity— at least not yet, analysts told Reuters. Earlier this month Walmart executives triggered a sell-off when they blamed weight loss drugs for a slight pullback in food consumption.

“It feels like quite an overreaction," Aviva portfolio manager Richard Saldanha told Reuters. "People are extrapolating long-term consumer habits."

Schneider said investors in Nestlé shouldn’t worry. 

“We consider any potential revenue exposure to be very limited,” he said. “In my judgment, it gets fully compensated by the innovation opportunities I just outlined.”