Kellogg’s, the well-known cereal company, is making a major change to its business strategy. On Monday, the company announced plans to spin off its stable cereal business and focus on its faster-growing snack unit. As part of this transition, the company will also change its name to Kellanova. This move comes in the midst of a larger trend among food companies, who are increasingly investing in the snacking sector.

One example of this trend is the recent acquisition of Hostess Brands, the maker of Twinkies, by J.M. Smucker for $5.6 billion. The company aims to expand its snack offerings through this purchase. However, as food companies continue to bet big on snacking, the rise of drugs like Wegovy and Ozempic could pose a threat to their future sales growth.

These drugs, known as GLP-1 agonists, are used to treat obesity and diabetes by suppressing appetite. They have gained popularity in recent years, with over 9 million prescriptions written in the U.S. in the fourth quarter of 2022 alone. Morgan Stanley estimates that by 2035, the number of patients taking GLP-1 drugs could reach 24 million, or nearly 7% of the U.S. population.

If this projection holds true, it could lead to a decline in consumption of baked goods and salty snacks by 3%. The impact could be even greater if the new eating habits of those using the drugs extend to their broader households and friends. Companies like Hershey, Mondelez, PepsiCo, General Mills, and Kellogg’s successor Kellanova could face challenges as a result.

However, not everyone in the industry agrees that GLP-1 drugs will be problematic for snack manufacturers. One factor that could work in their favor is the high cost of these drugs. At roughly $1,000 a month, they may not be affordable for many consumers. Additionally, the target audience for these drugs is more likely to be lower-income individuals, who tend to over-index in consumption of indulgent salty snacks.

Furthermore, GLP-1 drugs require patients to inject themselves once a week, and the effects disappear if the treatments are discontinued. This could limit the long-term impact on consumer behavior. However, as the drugs become more affordable and more widely adopted, the food industry may need to adjust and innovate their offerings to meet changing consumer preferences and demands.

In response to these potential challenges, food companies have already been making efforts to offer healthier options. PepsiCo and Mondelez, for example, have acquired smaller brands that specialize in healthier snacks. They are also investing in research and development to create new formulations that replicate the taste of full-sugar and salt snacks.

While the impact of GLP-1 drugs on the food industry may be limited in the near term, companies will need to adapt to changes in consumer behavior over time. These changes could include slower sales growth and divestment of certain brands. Overall, the rise of these drugs could put additional pressure on food companies to update their portfolios and cater to the evolving preferences of consumers.

In summary, food companies are increasingly focusing on the snacking sector, but the rise of drugs like Wegovy and Ozempic poses a potential threat to their future sales growth. These drugs, used to treat obesity and diabetes, could lead to a decline in consumption of baked goods and salty snacks. However, factors like the high cost of the drugs and the target audience may limit their impact. Food companies are already taking steps to offer healthier alternatives and innovate their product offerings. While the long-term effects remain uncertain, the rise of these drugs may necessitate further adjustments in the industry.