Kellogg’s, known for its century-long cereal presence, is changing strategy. On Monday, it will spin off its stable cereal business and focus on its more dynamic snack operation as Kellanova. Major food companies are betting on snacking culture, as shown by this crucial choice. This aggressive effort comes as pharmaceutical firms, particularly those in the obesity and diabetes treatment sector, gain pace with Wegovy and Ozempic, possibly threatening traditional snack producers.
Snacking Boom: Decades, Change
As regular supermarket sales stagnate, Big Food firms’ decade-long shift to snacking has gathered steam. This trend is more noticeable as prices rise across categories. HSBC expects the U.S. market for savory snacks to expand 6% yearly from 2022 to 2027, and sweet snacks to grow 4.6%. According to Accenture, three-quarters of customers plan to snack daily.
Generational Changes in Snacking
Millennials and Generation Z snack more than older generations, driving the trend. Mintel food and drink expert Kelsey Olsen notes that younger generations prefer smaller, more frequent meals, which allows for snacking. J.M. Smucker, which acquired Twinkie producer Hostess Brands, intentionally expands its food range as munching becomes a cultural norm.
Big Pharma’s Rise: Diabetes and Obesity Drugs
Drugs like Novo Nordisk’s Ozempic and Wegovy are helping pharmaceutical businesses profit from the snacking revolution. The fourth quarter of 2022 saw 9 million U.S. prescriptions for GLP-1 agonists, which help individuals lose weight. Morgan Stanley anticipates that 24 million Americans—7%—may use GLP-1 medicines by 2035.
Potential Big Food Impact
The success of obesity and diabetes medications could affect the sales of Oreos, Doritos, and Hershey’s Kisses. Morgan Stanley research predicts that baked goods and salty snacks may drop by 3% or more if these medications change the eating patterns of users’ families and friends.
Dispelling Myths: Snack Sales May Win
Not all snacking experts are concerned about the consequences. After the acquisition of Hostess Brands, Smucker CEO Mark Smucker defended Twinkies’ future, saying consumers will continue to seek different snacks.
Several variables may boost snack sales. GLP-1 medications cost $1,000 a month, which may limit their availability. The main consumers of these medicines may not be the same group that eats ‘junk food.’
Future Vision: Adaptation and Innovation
Food companies may lose brands and see slower sales growth as the market evolves. PepsiCo and Mondelez are acquiring healthier snacking, so the market is moving toward healthier options. Healthy formulations that taste like full-sugar and salt versions are being developed with significant research and development.
Oliver Wright of Accenture sees healthy Oreos mixing with their classic counterparts. While obesity and diabetes medicines may eventually affect snack sales, the sector may react through innovation and portfolio rearrangement. Changing consumer choices and health concerns will change how we see and eat our favorite snacking in the coming decade.