Snackonomics in the age of Ozempic
Timothy P. Carney
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Capitalism isn’t always about competition. Sometimes, it functions like a team sport. Economists, for instance, talk about “complementary goods.” Apps such as Twitter and WhatsApp made iPhones and Androids more valuable. High-quality, affordable speakers and headphones make people more likely to buy music. It’s a win-win for different companies.
But capitalism is often red in tooth and claw: In the free market, one man’s gain is typically another man’s loss. Some goods are “substitute goods,” such as bowling alleys versus movies or Coke versus Pepsi.
These days, the fierce battle is between Cheez-Its and Ozempic.
Ozempic and Wegovy, two blockbuster new weight-loss drugs, work by suppressing appetite. Naturally, then, they are a substitute for actual food, particularly those foods that provide little nutritional value.
Walmart has a unique position to judge this, being a massive retailer of food and a leading filler of prescription drugs. What the company’s data show: Shoppers picking up Ozempic or Wegovy are also buying less food than they used to. The drugmakers’ gain is the snackmakers’ pain.
“U.S. food companies are unlikely to sit idly by,” a report in Bloomberg warned. “We’re by no means complacent,” said the CEO of Kellanova, the snack-food spinoff of Kellogg’s, which sells Cheez-Its, among other snacks.
What exactly the noncomplacent snack-food companies will do is unclear. Will they make their snacks tastier? Invent a new salt that’s more addictive? Pivot their cracker marketing toward pet owners? Such is the innovation spurred by competition.
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It turns out Ozempic and Wegovy are also substitute goods for jet fuel. Having lighter passengers means cost-savings, hopeful airline executives are saying. And, hey, appetite-suppression could reduce airlines’ pretzel budgets, too.
Maybe the snackmakers and oil companies should have lobbied the Food and Drug Administration not to approve Ozempic. Capitalism, after all, is a dog-eat-dog world — unless, of course, the dog is on a diet.