Could skyrocketing use of the weight-loss drug Ozempic be responsible for falling drinks sales around the world?

Fundsmith investment manager Terry Smith has revealed he sold his stocks in Diageo in 2024 because his firm suspects that the “entire drinks sector is in the early stages of being impacted negatively by weight-loss drugs”.

In his annual letter to investors Smith said Brown-Forman was also feeling the heat following studies showing that drugs such as Ozempic can cut alcohol cravings by as much as half.

“Brown-Forman, one of the world’s top five drinks companies and the distiller of Jack Daniel’s Tennessee Whiskey has suffered from the fall in consumption from the pandemic highs and is probably seeing early signs of the adverse impact of weight-loss drugs,” Smith said.

“We sold our Diageo stake during the year which I will cover later but retaining Brown-Forman keeps a foothold in what has long been a sector with good business characteristics and which has the potential benefits of family control, which can promote good long-term decision making, and a larger bias towards premium spirits than Diageo which may help obviate the impact of weight loss drugs (‘drink less but better quality’). It is a company which survived Prohibition so we hope there is literally something in the DNA to help with these adverse circumstances.”

Mounting research findings show GLP-1 drugs like semaglutide, the main ingredient in Ozempic and Wegovy, reduce alcohol consumption.

“We’ve known for some time from animal studies that GLP-1 receptor agonists reduce alcohol intake and motivation to consume alcohol,” Christian Hendershot, director of clinical research at the University of Southern California Institute for Addiction Science, told NBC News.

Theories include that its effects may have something to do with the drugs’ ability to reduce cravings and the effects of alcohol. Studies using both animals and humans as test subjects have found that GLP-1 drugs reduce the release of dopamine when alcohol is consumed.

Other theories are that it may have something to do with the sugar in alcohol, as GLP-1 drugs make sugary beverages less appealing. 

New York University marketing professor, best-selling author and podcaster Scott Galloway told the ADMA Global Forum in Sydney last year that the stocks of food, drinks and quick-service restaurant businesses could soon feel the impact of GLP-1 drugs.

He claimed the average Ozempic user consuming 62% less alcohol, and of those people, 20% cut out alcohol entirely.

“I think it’s going to rock the stock market,” he said.

“I would not want to be in the drinks business, the quick-service food business, the sugary, salty, fatty businesses.

“I think this is going to dramatically reshape [the market]. Everyone’s talking about AI, but I think this is going to be a bigger meteor in terms of where market capitalisation flows to and from over the next 24 months.”

US bar blames Ozempic for destroying business

Last year Drinks Business revealed that a report by financial services company Moody’s Ratings indicated that by 2023 as many as 30 million Americans could be on GLP-1 drugs such as Ozempic.

The report suggested that the growing use of Ozempic could impact the drinks trade, as people taking the drug report experiencing a decreased appetite for both food and alcohol.

Dallas bar Trova Wine and Market shut down on 18 January after four and a half years of trading, with owner Michelle Bonds telling Dallas Morning Post the growing popularity of Ozempic had contributed to the decision.

“I do have a lot of patrons who openly talk about the addition of Ozempic to their lives,” Bonds said. “We saw some traction when we marketed our salads as having 30g of protein if you add chicken — as those taking the drug should be consuming high amounts of protein with each meal. But at the same time, we saw a decrease in alcohol consumption and the amount of food ordered per customer.”