A
new
class
of
highly
effective
weight
loss
medications
could
deal
a
blow
to
several
major
Swiss
food
companies
while
benefiting
others,
according
to
Vontobel.
The
drugs,
which
imitate
the
effects
of
the
GLP-1
hormone
to
reduce
appetite
and
calorie
intake
dramatically,
are
showing
remarkable
efficacy
in
clinical
trials.
As
a
result,
patients
lose
up
to
25%
of
their
body
weight
on
average.
Despite
the
high
cost,
the
investment
bank
estimates
that
the
demand
for
these
drugs
will
grow
25%
compounded
annually
over
the
next
three
to
four
years.
“GLP-1
users
report
significantly
lower
hunger
and
food
cravings,
as
well
as
a
sensitive
stomach,”
said
Arben
Hasanaj,
equity
analyst
at
Vontobel,
in
a
note
to
clients
on
March
20.
“Therefore,
the
most
affected
categories
are
snacks/confectionary,
‘fast
food’,
frozen
packaged
foods,
ice
cream,
soft
drinks
&
alcohol
and,
to
a
lesser
extent,
(red)
meat,
pasta,
and
coffee.”
Potential
losers
That
spells
potential
trouble
for
Swiss
conglomerates
with
significant
exposures
to
those
categories,
like
baked
goods
maker
Aryzta
and
chocolate
giant
Barry
Callebaut
,
according
to
Vontobel.
Both
stocks
are
traded
in
the
U.S.
over
the
counter.
The
Swiss
investment
bank
estimated
that
the
annual
mid-term
growth
of
those
two
companies
could
fall
by
20
to
40
basis
points
if
the
obesity
drugs
gain
widespread
adoption.
“Companies
exposed
to
the
mentioned
categories
and
present
in
high-obesity
countries
(US,
Europe)
are
more
likely
to
see
negative
effects,”
the
Vontobel
analyst
said.
“Therefore,
we
see
a
medium
impact”
for
both
Swiss
companies,
Hasanaj
added.
Vontobel
expects
shares
of
Aryzta
and
Barry
Callebaut
to
be
relatively
flat
over
the
next
12
months.
However,
other
analysts
disagree.
For
instance,
Stifel
analyst
Pascal
Boll’s
bullish
price
targets
point
to
a
37%
upside
potential
for
Aryzta.
Meanwhile,
Berenberg
analyst
Samantha
Darbyshire
expects
Barry
Callebaut
to
rise
by
45%
over
the
next
12
months.
Potential
beneficiaries
Vontobel
also
pointed
out
that
not
all
packaged
food
companies
will
likely
lose
out
as
the
new
weight
loss
drugs
are
adopted
more
widely.
In
contrast,
Nestle
and
ingredient
maker
Givaudan
could
see
a
limited
or
positive
impact,
as
they
have
diverse
product
portfolios
that
include
many
healthy
offerings,
Vontobel
said.
The
two
stock
are
also
traded
in
the
U.S.
over
the
counter.
“Diversified
Nestlé
&
Givaudan
(both
Buy)
should
be
less
affected
as
they
can
also
contribute
to
this
health
trend,”
the
Vontobel
analyst
said.
Instead,
companies
with
a
“narrow
focus
on
exposed
categories”
are
likely
to
feel
the
impact
of
the
weight
loss
drugs
on
their
bottom
line.
