How Big Food Is Navigating the GLP-1 Era

0:07Last month, our colleague Amira McKee got an inside look at a test kitchen in Omaha, Nebraska. So imagine an industrial kitchen, the kind you might see in a fine dining movie, you know, the one, with these stainless steel appliances, everything's huge and the chefs are in these aprons. I'm like picturing Ratatouille in my head, but okay, I'm with you. Something like that. And, you know, you might not realize that you're in, you know, a development laboratory for one of America's biggest food makers. That food maker is Conagra, the company behind Slim Jims and Hungry Man Dinners. Kitchens like this one are places where food brands perfect the kind of packaged food you see on shelves and in freezers at grocery stores around the country.

0:55In this test kitchen, Conagra chefs were working on their newest breakfast recipes. These chefs serve this bowl of microwaved eggs and sausage and potatoes to a group of executives. The executives sort of pour this gooey orange cheese sauce over the bowl. And before they even take a bite, they sort of pause. And they ask themselves, was this satisfying? How would this make a consumer feel? They're sort of trying to evaluate whether or not, you know, this consumer experience of, again, pouring the cheese sort of adds something for the consumer who's buying this in the frozen aisle of their grocery store.

1:36Kitchens like this one are a window into a shift happening across the food industry. People spending less on food. It's a shift driven by a combination of higher food prices, healthy eating trends, and the rise of GLP-1 weight loss drugs. A pretty solid portion of the American population is already on these drugs, and it's a number that's expected to really increase aggressively in the next couple years and drain the industry of billions of dollars. And so it's about creating products that will woo and win over these GLP-1 consumers who don't feel hungry for the foods that these companies make?

2:14How do you deliver satisfaction and satiation to consumers who don't experience their hunger and fullness like an average person might? Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, September 2nd.

2:37Coming up on the show, the food industry's attempt to win over the GLP-1 user.

3:08it does about them and where they might not have the answer just yet. There's hope in hard questions. Ask yours at claude.ai slash the journal.

3:26Amira, what is your go-to snack? I'm very partial to chocolate-covered pretzels myself because I love, like, it's salty, it's sweet, it does all of the things all at once. That's a good one. I concur on that point. I'm also a big fan of a tortilla chip. Yeah. Honestly, make it a Dorito, make it anything, and I'll enjoy it. Saltiness, crispiness, and at least in my case, sweetness, or maybe some combination of all of them. Those are the types of flavors and textures that the food industry turns to to keep us coming back for more. A lot of these snacks are really designed to cater to those cravings.

4:06The kinds of things that you sort of think about during your workday or, you know, have to keep yourself from eating off the snack bar. To put it sort of flippantly, right, these food makers make the kinds of foods that we want to eat. And they invest a lot of time and money into studying and figuring out exactly what that is. Because these food companies are so good at fine-tuning their products to what we crave and the kind of food we're really excited about, critics have accused the industry of sort of getting consumers hooked on their foods, drawing comparisons between what nicotine does to smokers and sort of fueling the obesity epidemic we have in our country.

4:44And have food companies pushed back on that? Food companies would tell you, right, that their goal is to make the food that people want to eat. But GLP-1 drugs are changing how people feel about food and how much of it they even want to consume. There's a pretty large body of data about how GLP-1 sort of changes consumer sentiment. One study by PwC sort of points out that GLP-1 users are most likely to turn away from foods like salty snacks and baked goods. Also products like alcohol, other things that are sort of based on cravings. And it's not just that these consumers are craving less. They're also experiencing food differently.

5:27Studies have found there's this pretty well-documented side effect of the medications that causes individuals taking them to not experience flavor the same. It impairs things like sweetness, like saltiness, like sourness. One of these folks taking these medications sort of described the first couple of months on Wegovi that his meals tasted like styrofoam. Things that he once loved just didn't taste that good anymore. Others have expressed this feeling on social media too. So anyone else have a strange metallic taste in their mouth? My Diet Cokes don't taste the same. My foods don't taste the same.

6:03Starting a GLP-1 has completely changed my diet and my taste buds. And we're talking a lot of Americans now, right? I saw one report that said one in five U.S. households have someone who's taking GLP-1s, which sounds like a big number. It is certainly a good cohort of American households that are being impacted by GLP-1s in some way, shape, or form. It's important to remember that the person in that household is likely a parent, right? Oftentimes the person who's doing the grocery shopping for the house, right? There are implications beyond the individual when it comes to sort of having a GLP-1 user in the house.

6:38Right. There's like sort of the adjacent people as well who are going to be eating from the same grocery list, basically. Exactly. Exactly. And JP Morgan's sort of base case projection for GLP-1 users is that it'll drain the food industry of$30 to$55 billion in the next couple of years as soon as 2030. And so it is a pretty huge headwind for the industry. Plus, a lot of the people who are likely to be on GLP-1s now were also some of the food industry's best customers. To keep those former snackers coming back, companies have to consider a new set of factors in the food they sell. For instance, studies show GLP-1s can lead to muscle loss and can cause gastrointestinal issues.

7:26What does that mean for the snacks that those consumers want? There are a growing number of consumers who are thinking more about their health and looking for attributes like more protein, more fiber. They are sort of moving away from those center aisle products and towards the periphery for fresher goods. I like the visual of that. They're going towards where the produce is, where the vegetables are, where the smoothies are, rather than in the middle where all the cookies and the biscuits and the chips are. And that is a problem for food makers who make, you know, snacks, the kinds of things that you'd find in the middle of the grocery store.

8:02Because they're imagining a consumer who's standing in a frozen aisle and looking at sort of a plethora of options. And they're looking for, at least according to their research, right, protein and fiber. But you also want something that makes you feel good, right? That is something that you want to eat. And puzzling that out is part of the challenge. And GLP-1 users aren't the only challenge the food industry has to worry about. Food companies in general are in sort of a sea of troubles. Just to name a few, I mean, food companies are dealing with increasing costs, consumers penny-pinching because of persistent inflation.

8:38And there's also this increasing cohort of sort of health-conscious consumers of which GLP-1 users fit in. And they're looking to sort of capture GLP-1 users and the sort of health-conscious crowd by making products that appeal to all of their needs in one. So how food companies are meeting the moment? That's next.

9:16To keep newly health-conscious shoppers coming back for more, the food industry is turning to a bunch of different approaches. One is making sure the packaging highlights the types of things these customers are looking for. And so they're looking to grab these folks' attention. And one strategy that some companies have made, I'm thinking of Conagra and Nestle, is to have GLP-1-friendly badges on them. So you can sort of scan these boxes and see explicitly GLP-1-friendly. But there are other products that say, you know, or have huge call-outs that this has, you know, 40 grams of protein in it or is high in fiber.

9:52But more importantly, companies also have to nail the recipes. Amira spoke to some chefs in charge of the recipe revamp at Canagra and other big food companies. And they told her that finding the right balance between what consumers want and what food companies can actually make takes a lot of trial and error. One food scientist, it sort of stuck with me. She said, you know, we could make a pizza with 120 grams of protein, but it would have your daily calorie limit, and you would also have to take a nap after. Right? They can sort of— That's it. That's it for the day. Yeah. Because protein sort of hits—sit heavy, and it also tends to be higher in calories.

10:33And some of these chefs were telling me about another prototype of sort of a burrito with 40 grams of protein that had to be scrapped because they just couldn't fit that amount of filling in a tortilla that was appropriate for sort of an American microwave. Wow. One recipe from the Conagra Test Kitchen did see some success, according to the company. Amira got to try it when she visited the facility. One of the recipes that they sort of walked me through is this buffalo mac and cheese that has 40 grams of protein and is labeled to really emphasize that it's high in protein. What did it taste like?

11:07It was good. It was tasty. It felt rich. It had a lot of chicken in it, which I imagine is where the protein comes from. I mean, did it taste the way you expect buffalo mac and cheese to taste like, or was it blander? It felt pretty decadent to me. And that is an example of a product that is a little bit higher in calories and has a little bit of a larger portion, but that the sort of higher in protein was something they did with GLP-1 users in mind.

11:37Beyond experimenting in test kitchens, food companies are also turning to data to get a clearer picture of what these customers actually want. So ConAgra, for example, sort of sifts through credit card data and social media posts. They're looking at our, you know, late night delivery orders, our fast food menus, the kinds of things we're talking about on Reddit, that kind of data to figure out what we're looking for. Some companies, like General Mills, have gone a step further. They created what they call AI personas. Basically, they take a bunch of interviews, social media, and sales data to help advise their product development teams.

12:14One is named Lisa, who represents a woman in her 30s or 40s with sort of a long history of dieting and who's on GLP-1s. And the company says that doubles, like Lisa, help the company develop solutions, including helping them develop a GLP-1-friendly brand that is debuting soon. What are these digital personas, this data, what is all that able to do that traditional focus groups aren't able to? One of the benefits that General Mills sort of pointed to was that you can do it in really a fraction of a time that is required for these traditional testings. And also, it's built on sort of an immense amount of data.

12:53And so Lisa can be representative of a general average of her cohort with some of these attributes, whereas you or I would be a very specific person, you know, and not a silly. It would be anecdotal rather than database. It would be anecdotal. Interesting. Amira says some food executives are ready to invest in these strategies because this moment could be different. GLP-1s have the potential to be more lasting than other diet trends the industry has weathered. At Canagra, this executive whose name is Bob Nolan, has been in the industry in a very long time and studies sort of demand science, what consumers want, has seen lots of these sort of dieting practices come and go, thinking about keto, low-carb, gluten-free, fat-free.

13:42Yeah, yeah. And those have waned and waxed over the years, right? But GLP-1s are different just structurally. In the next five years, we could see hundreds across the globe of generic offerings, new versions of these drugs. And these medications really aren't going anywhere. And food companies realize that. If the old playbook, right, is making food that is delicious and gets people excited about eating, When it comes to GLP-1 users and our sort of health-conscious crowd, the new playbook is making food that these folks have decided they should eat. And so have those kinds of attributes like protein and fiber and are easy to make and maybe have some of these sort of experiential factors to them.

14:31Still, Amira says there's a huge consumer base that food companies need to continue to cater to. Because most Americans aren't on GLP-1s and still want their usual snacks. How are these food companies balancing these two groups? You know, the health-conscious consumer and then the more traditional consumer who's still kind of like going to buy the brands and the snacks and the foods that they've always bought. The short answer is that lots of these products that you sort of know and love that are high in fat, salt and sugar, right, they're not going anywhere. These sort of health-conscious products are additions, right, to help draw in more of these consumers.

15:08but many of those products that we know and love aren't necessarily going anywhere. So my chocolate-covered pretzels are safe. Seems like it.

15:31That's all for today, Wednesday, September 2nd. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Jesse Newman.

15:45Thanks for listening. See you tomorrow.