This Is How the Food Industry Is Preparing For a Post-Ozempic World

SPEAKER_1 (0:03)

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Joe Weisenthal (0:20)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:25)

And I'm Tracy Alloway.

Joe Weisenthal (0:26)

Tracy, we like to talk about snacks and drinks and stuff on the show. And it's kind of just something we're interested in, but I actually think that there's a deeper fundamental reason by why we keep coming around to this topic.

Tracy Alloway (0:39)

Wait, it's not just because we like snacks?

Joe Weisenthal (0:42)

I mean, that is the deep, deep, deep reason. But the other reason is I kind of think, I've been thinking about this lately, that the proliferation of different types of snack foods and beverages and energy drinks, which multiply like crazy on store aisles, it's like the ultimate story of capitalist success and the consumer economy, that we just keep getting this endless permutations of great flavors and different ways to consume these flavors. It's like the pinnacle of the consumption economy.

Tracy Alloway (1:14)

Okay, well, I would say, I guess capitalism... Well, capitalism has to have some upsides, and I guess Elode flavored Cheetos are one of them. That's fair. I do think what's interesting to me about this moment in snacks is there seems to be sort of two things going on, like two mega trends, the very early beginnings of two mega trends. So one is the idea of what's going to happen to snack food in a GLP-1 fueled world. And we touched on this a little bit last year when we spoke to James Van Geelen, and he was talking about his Ozempic and GLP-1 investment thesis. And I really like speaking to him because it wasn't just like all the companies that are making these drugs are going to see their share prices absolutely surge.

It was also, there are going to be these second-order knock-on effects on some consumer companies. And you could see that playing out a little bit last year. You can certainly see it playing out now. I think almost every major food and beverage company that reported in the most recent quarter had a GLP-1 or Ozempic-related question.

And then I guess the other megatrend is just this idea of companies having to become more and more creative to also drive consumption. So you have to have more flavors in order to grow your market share, to keep people engaged and interested, and posting pictures of your food on TikTok or Instagram or whatever.

Joe Weisenthal (2:50)

Totally. And you just see this play out, I don't know. This is why I go back, I think about those sort of famous or infamous and maybe apocryphal things where it's like some Soviet leader came to the US and saw a grocery store. It's like, okay, capitalism is the answer.

Maybe there was something, but it really does feel like we're sort of at this moment where these maybe almost two mega trends are in competition with each other, right? Because there is this seemingly race to provide more flavor and more variety and more versions and special versions and stuff like that.

And then the sort of looming threat to the sort of traditional way of doing business from the GLP ones like Ozempic. So there is never too much snack food and there's never too much conversation about snack food.

Tracy Alloway (3:33)

Well, the other thing that I just remembered, I totally agree. You can never have enough snack food. But the other thing was the conversation we had with Ryan Harlan where he was talking about the technology that's now going into producing these snack foods and also AI nowadays. So this idea that you can basically model a virtual manufacturing line for a new flavor. You can use AI maybe to come up with new flavors. So it seems like all of snack foods is getting more sophisticated.

And some of it is of course in response to good old fashioned consumer demand, give the customer what they want. But part of it also, I have to think, might be in response to competition from GLP-1 and Ozempic and the idea that well, if we're gonna eat less food overall, then maybe the way to keep customers is to make sure that food is really, really interesting. And good.

Joe Weisenthal (4:27)

I'm glad you brought up the Ryan Harlan episode because, right, that was about the sort of supply side innovations that allow companies like, say, a Frito-Lay to try more limited run lines and move things faster and get a, you know, you have a theoretical test flavor, you can make a chip faster. Anyway, so that raises the question, where does the flavor come in the first place when there is a new chili lime or a new durian flavored testido?