(Bloomberg) — The bad news keeps piling up for the makers of everything from snacks to chocolate and booze.
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The latest blow took the form of comments from Walmart Inc., which said this week it’s already seeing an impact on shopping demand from people taking Ozempic, Wegovy and other appetite-suppressing medications. That sent shares of food and beverage companies sliding.
The S&P 500 Consumer Staples Index fell 0.5% on Friday, extending losses after its worst session since January just a day earlier. Modelo maker Constellation Brands Inc. and Kellanova, the company behind Cheez-It and Pringles, dropped on Friday, while Oreo maker Mondelez International Inc. closed at the lowest level since November. The consumer staples gauge suffered its worst week since May, with retailers Walmart, Costco Wholesale Corp. and Kroger Co. also declining.
Read More: A Stock Investor’s Guide to Navigating Weight Loss Opportunities
“When Walmart mentioned it, I think the concept of weight loss drugs having a broader effect on a wide range of companies really took hold in investors’ minds,” said Steve Sosnick, chief strategist at Interactive Brokers.
In Europe, food and beverage companies also came under pressure. Chocolatier Lindt & Spruengli AG and Anheuser-Busch InBev SA slid, while Nestle SA dropped 2.5%, the most since May.
To be sure, consumer staples stocks have been falling for some time, especially as inflation squeezes household incomes. The industry also tends to pay hefty dividends that look less appealing for investors compared with 5% interest at money market funds. In a note to clients on Friday, Barclays Plc analysts argued that rising interest rates, not weight loss drugs, have fueled the recent drop in consumer staples stocks.
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The S&P 500 Consumer Staples Index has significantly underperformed the broader market in 2023, and it’s trading at the lowest level in a year after three straight weeks of losses.
Given the rapid popularity of this new class of weight loss drugs and an early warning from one of the biggest…
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