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THE IMPACT OF WEIGHT LOSS DRUGS ON CONSUMER SPENDING

The rapid spread of GLP-1 weight loss drugs is accelerating - and as pills become more readily available and prices drop, usage is set to rise further, with sweeping consequences for global consumer spending, said strategists at HSBC.

Roughly 12% of American adults and 7% of British adults are using them, with females accounting for the bulk of users, they said.

Given how GLP-1s work, HSBC expects food consumption to converge on recommended calorie intakes, with the impact likely to be greatest in those economies where obesity rates are high, calorie intakes are high, or food makes up a big share of the household consumption basket.

There have already been some implications, HSBC noted. U.S. spending on sugary foods has fallen, and in the UK users of these drugs are swapping fast food for vegetables. But over the coming years this may have a much bigger impact on the economic data.

Food away from home accounts for 5% of U.S. consumer spending, and more in many other parts of the world - and the impact of reduced demand in this space could easily reduce overall consumer spending by north of 1%, the strategists estimate.

Even if these drugs are only taken by half of the people who are obese, HSBC says it could lower food consumption by 2% to 9% depending on markets, pulling down overall consumer spending by 0.5% to 1.5%.

"In more extreme scenarios of a wider push towards lower calorie intakes, we could see overall consumption fall by 6-7% if calorie intakes more universally fall by the 30-40% drops that are possible."
There are winners too. A greater focus on healthy eating, fitness and higher protein intakes seems likely across societies, which could bring many health benefits and reduce healthcare spending, with savings potentially redirected toward gym memberships, athletic wear, and sporting events.

These drugs look set to impact consumer spending patterns materially, and many implications for overall consumer demand may be seen in the coming years, particularly on food, HSBC said.

(Joel Jose)

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