Could the GLP-1 boom enable shrinkflation? Summary
- GLP-1 users prefer smaller portions and nutrient dense foods
- European GLP-1 adoption grows slowly compared with faster united states uptake
- Smaller pack sizes likely emerge selectively through category specific product innovation
- Shrinkflation possible if prices hold while food volume falls faster
- Opportunities strongest in frozen meals functional snacks dairy drinks
GLP-1 weight-loss drugs are projected to lead to a change of diets for their users. Consumers taking the weight-loss drugs tend to have smaller appetites, and thus desire smaller portion sizes.
These portions also need to be nutrient-dense, as users often need to get the same amount of nutrients from less food.
Widespread use of the drugs will likely lead to smaller pack sizes. Could this be an opportunity for companies to save through shrinkflation?
Will demand be high for smaller portions?
The popularity of GLP-1s will likely drive demand for smaller portions. But in Europe, this will be gradual rather than immediate or market-wide, suggests Nandini Roy Choudhury, principal consultant at market analytics company Future Market Insights.
“These drugs suppress appetite and tend to reduce overall calorie intake, which makes users more likely to prefer smaller, more manageable portions and foods with a stronger nutritional payoff per serving.”
In Europe, use of the drugs is lower than in the US, in part due to the continent’s healthcare systems being less privatised and thus more reliant on publicly-funded reimbursements, and in part because of persistent consumer scepticism.
Nevertheless, expansion of uptake shows no sign of stopping and use is predicted to grow even in Europe.
How will demand affect pack sizes?
Demand for smaller portions may reduce pack sizes, suggests Choudhury. But this is unlikely to be “a blanket downsizing exercise across the board” and will much more likely be seen in specific categories.
“The more likely response is targeted innovation: smaller meals, higher-protein formats, nutrient-dense snacks, portion-controlled products, and clearer positioning around satiety, protein and fibre.”
Examples of this type of product already exist, such as Conagra Brands’ GLP-1 positioning for its ‘Healthy Choice’ meals.
Could this save lead to shrinkflation?
The most important question, perhaps, is whether such changes could actually save money for food companies. In other words, whether pack-size reduction could open the door to shrinkflation.
The reality is – it’s complicated. Companies could, in theory, save money by reducing product size if they can do this without a proportional drop in price, says Choudhury. If the volume of the food itself falls more significantly than the costs of production, it is possible that companies can save money by reducing pack sizes.
Nevertheless, Choudhury points out, this is not always the case. “In many categories, smaller portions can actually raise the packaging-to-product ratio, require line changes, or create pricing sensitivity if consumers feel they are simply being given less for almost the same money.”
This last point is crucial. Rather than providing consumers with the same but smaller, which could create pushback, companies developing products targeted to GLP-1 users have a bigger opportunity in emphasising specific benefits such as nutrient density.
Which sectors are likely to reduce pack sizes?
Shrinkflation is only half the story, suggests Choudhury. GLP-1s also make smaller pack sizes more commercially viable, and this is the case in some categories more than others.
For example, frozen ready meals, especially those high in protein and rich in fibre, could have an opportunity here, suggests Choudhury. So could convenience foods, albeit those positioned around health.
Functional snacking and better-for-you products have opportunities in the area, if smaller servings can still deliver nutrition or satiety.
Dairy, yoghurt, protein drinks and meal-replacement formats could also take advantage of GLP-1 users’ need for nutritional density.
Even foodservice and on-the-go could adapt to the needs of GLP-1 users in the future.
While shrinkflation is certainly a possibility as a response to GLP-1s, Choudhury suggests, the real opportunity provided by the drugs’ popularity is making such smaller portions more acceptable to consumers.
