Weight-loss jabs threaten Greggs' growth, analysts warn

"The warning comes as Greggs continues to grapple with slower sales growth since mid-2024, a period that has prompted investor speculation over whether the UK has reached "peak Greggs". The company has attributed its softer performance to fragile consumer confidence and last summer's unusually hot weather, which reduced footfall, while some shareholders have questioned whether its rapid store expansion has begun to cannibalise like-for-like sales."

"Analysts at Jefferies have now added another potential headwind: the rising popularity of weight-loss drugs such as Mounjaro and Wegovy. In a note to clients, the broker said the trend could represent an "enduring challenge" for Greggs and weigh on its longer-term growth prospects. The drugs work by mimicking the GLP-1 hormone, which suppresses appetite and increases feelings of fullness."

"The analysts estimate that as many as four million people in the UK may now be using weight-loss jabs, equivalent to around 7.5 per cent of the adult population. "It may only be 10 per cent of GLP-1 users that would shop at Greggs," the Jefferies team said. "But that 10 per cent would be high-BMI individuals consuming lots of calories and, we would infer, likely some of Greggs' best customers."

Greggs has faced slower sales growth since mid-2024 amid fragile consumer confidence, hot summer weather that reduced footfall, and concerns about store cannibalisation. Jefferies highlights the growing popularity of GLP-1 weight-loss injections such as Mounjaro and Wegovy as a potential long-term headwind for demand. The drugs suppress appetite and increase feelings of fullness, and US research suggests users cut back particularly on high-calorie, ultra-processed savoury foods that include many of Greggs' core products. Jefferies estimates up to four million UK users, and a small share of those users could represent some of Greggs' most valuable customers who might stop spending.

Read at Business Matters