Brewbound Podcast: Bernstein Analysts on Ozempic’s Effect on Bev-Alc Consumption

[00:00:00] Justin Kendall: Heading to CBC? Kick things off the day before at Brewbound's meetup at Love City Brewing in Philly, Sunday, April 19th from 5 to 7 p.m. Connect with beer industry leaders, grab a drink, and catch up with the Brewbound team. It's free to attend and walking distance from the convention center. Head to Brewbound.com slash lovecity.rsvp. And don't forget to catch the Brewbound team at booth 956 during CBC. How worried should you be about ozempic and alcohol consumption? We'll talk about it next on the Brewbound Podcast. Hello and welcome to the Brewbound Podcast. I'm Justin Kendall.

[00:00:51] Jessen Fante: I'm Jessen Fante. And I'm Zoe Licata.

[00:00:54] Justin Kendall: And this episode, as I plugged at the top, we are going to be talking about Ozempic, the weight loss drug and its potential effect on alcoholic beverage consumption. Joining us later in the show will be Nadine Sarwat and Trevor Stirling. You might know them as analysts with Bernstein. They've done extensive research on Ozempic and the potential effects on alcoholic beverage consumption, so we'll hear all about it with them and tell you what you should know. But first, let's plug the Brewbound Live Business Conference coming up December 6th and 7th in Marina del Rey, California. That's coming up pretty quick. We've got a great lineup coming together. I think it's one of the best lineups we've done.

[00:01:39] Jessen Fante: Yeah, I'm excited for Rebound Live. I booked my flight yesterday, but I actually booked two flights because my baby is coming. I can't promise she will be at the conference, but she will be in the area with my mom.

[00:01:52] Bernstein Autonomous: That's very exciting. I also booked my flights this weekend. I think that means it's real. It's happening. We're actually going to be there. It's happening.

[00:02:02] Justin Kendall: There are two ways to take, my baby is coming. So, like, I'm glad that she's coming with instead of, you know, she's not here yet, but she's gonna be here.

[00:02:13] Bernstein Autonomous: Yeah, we're not doing a live birth on stage.

[00:02:16] Jessen Fante: No, no, she will be six months old at that time.

[00:02:21] Justin Kendall: Yeah, and mine will be two. Like, the day that the show ends, she will have her second birthday.

[00:02:28] Jessen Fante: Oh, that's right. That's right.

[00:02:31] Justin Kendall: Yeah. Enough of that, let's talk about the things that are gonna happen at Brewbound Live. And I will say that there's gonna be a lot of networking, some with Jess's baby, maybe. And then- Some with Cora. Yeah. And, you know, people will probably be excited for that. They'll also be excited to hang out with a lot of our speakers. You know, we've got C-Store buyers, we've got leaders from Rheingeist, Crowns and Hops, the National Black Brewers Association, the Brewers Association. extra mile convenience stores, Circle K, Stone Distributing, Breakthrough Beverage. We've got a whole lineup that is just you're not going to find a lineup like this anywhere else.

[00:03:11] Jessen Fante: No, no, it's diverse in terms of like age of presenters, ages of the companies involved in terms of like angle of the industry, segments, geography. We've got some old favorites. We've got new faces. I'm pretty pumped.

[00:03:30] Justin Kendall: Yeah. And this is a chance to interact with a lot of these folks, network with them, set up meetings, you know, make new partnerships. One of the things that you two did was interview Schilling Cider about National Cider Month. And that program was largely born, I think, out of conversations that Schilling had with Mary Giver from Whole Foods at Brewbound Live.

[00:03:54] Bernstein Autonomous: Yeah, it was just one of many stories that we've heard. We're not making them up. There really are happening where there is productive networking happening at Brewbound Live and we are seeing things come about because of those conversations that happened there. So that was just the most recent one that we've heard of. And it's turned into a big program for both Whole Foods and for Schilling and for just all cideries who are involved with National Cider Month and doing some programming for it. So it was really cool.

[00:04:24] Justin Kendall: So set up some meetings, join us in Marina Del Rey. You won't regret it. You can get tickets at brewboundlive.com. With that, let's get to the news of the week. And speaking of Brewbound Live, our keynote address will be delivered by new Rheingeis CEO, Adam Bankovich. And he'll be joined on stage a little bit later by Rheingeis co-founder, Brian Goulding. But Rheingeis announcing its leadership changes, a lot of promotions. Rheingeis dropped the interim tag from Adam's title, and he is now the full-time CEO of the company.

[00:05:00] Bernstein Autonomous: Yeah, we saw Adam get that interim tag earlier this year. And when we talked to both him and Bryant at that time, they said, you know, we're, we're being genuine about saying, you know, he's not just guaranteed this job, we're going to do a full search of who's going to be right as our next CEO. And it turned out that it really was Adam and he showed the right kind of leadership that they were looking for and was on the same base with everyone about this new focus approach that they're having going forward. So we also got to talk to them about some of their new strategies going into this coming year, which is another one of the reasons why they'll be kind of kicking off Rebound Live for us is because they've reached this decade mark and they're trying to figure out what Ryan Geist looks like now and how to do that in the best, most productive way, both in terms of just physically what a company can do, but also in what's best for sales, what's best for morale, so many different aspects of the business.

[00:06:03] Jessen Fante: It's been really interesting to watch Rheingeist mature and grow and evolve the past few years because, you know, two years ago, two plus years ago, Brian and his co-founder Bob decided to step down and hire, you know, step down from like being really like in the nitty gritty of the day-to-day step and hire an external CEO to take over. And that person came from outside the industry and they were around for a little bit, but I think eventually they had decided to part ways as well. And that's a tough call when you're a founder and you decide, hey, you know, I've got, I built this thing and I've gotten it to this point, but, but what we need is someone else to steer the ship. But that's a big choice to make. And I remember feeling so impressed with, with Brian and Bob that they knew that they didn't quite have like the skills to build and the skills to maintain at scale are very different. So, and I'm just so excited to see what Adam does with the role because You know, he started with them last year as chief commercial officer, joined us at Brewbound Live on stage for a conversation about fourth category. And here he is. So it's really interesting to be able to watch all of these things happen.

[00:07:12] Bernstein Autonomous: Yeah, one of the things that Bryant kept repeating in the most recent conversation we had with him was about getting out of your own way. And I think that part of that was that change away from the co-founders in such involved leadership roles was they acknowledge that they don't need to be as involved in some of those business making decisions and can get away from some of that big craft entrepreneurial environment that can get a little extensive in innovation and other things sometimes. And so it's been this new theme for them. It's just getting out of your own way and figuring out what's best for the company overall.

[00:07:49] Jessen Fante: Perfect segue for what I was just going to say, which is that in terms of getting out of your own way, like they told us that they're really kind of re-imagining, but kind of discontinuing the, the RG Bev's line, which was what Adam was joining us at Ruban Live to talk about was their line of you know, fruit forward malt beverages that like aren't quite F&Bs, but aren't quite beer and aren't quite cider. And I think they really listened to consumer feedback who said, Hey, I remember the way that, you know, your bubbles used to be and why is bubbles different now? So one thing that they were doing in terms of getting out of their own way is to just going back to basics to something that worked, which you don't see too many companies innovate that quickly and kill the innovation product as quickly as they did, because they just said, hey, this isn't working for us. So they got out of their own way.

[00:08:39] Justin Kendall: Yeah. They said that the consumer found it confusing, that they didn't know what RG Bevs was. And so getting the Ryan Gaius name on Bubbles made a lot of sense. Yeah, there are going to be themes interwoven within that keynote address that are, you know, themes that are going to carry from 2023 on into 2024. And that's focus and that's leadership change at the top of major craft breweries. And Zoe and Justin have tracked it all year long in your absence, Jess, and we've got a whole list. It reads like a giant scroll of leadership changes this year. And Adam represents some of that new blood that's coming in and taking over some of these roles. So very excited for him. Very excited also for everybody that got a promotion at Ryan Guys. Cole Hackbarth is the new VP of Brewery Operations. Mark Fingoni has been promoted to VP of Sales. And Tracy Ireland has been promoted to VP of Marketing. Congrats to all of them. Awesome news for everybody. Good to see the company promoting from within and just paying off some longtime workers. Let's talk about something else that involves workers and culture and that's at Creature Comforts and the Brewer's Union of Georgia, BUG as it's known as, they had a union vote at Creature Comforts and it fell short.

[00:10:08] Bernstein Autonomous: Yeah, we've been waiting to see a bug even have this vote, let alone see a result for the majority of this year. They had been waiting for this result of this pre-election hearing that they had back in February to just be able to have an election vote. And they got the answer that the basically the allowance of being able to have this election in August. And so that election was held and had a majority vote 32 against 21 in favor of the Creature Comforts Union being recognized and being supported by BUG. So We have gotten statements directly from Creature Comforts as of this point, but we have been in contact with Bug and should have some more information from them soon. But Creature Comforts told us that Bug is fighting the results of it, so this might not be the end of this conversation. We might have more coming out of this, so stay tuned for that. But Creature Comforts told us in a statement shared with us that they were pleased but not surprised by the results. that there was a pretty large voter turnout, 90% of eligible employees participated in the election. I think it was a bit of surprise just by the amount of vocalization there was around this vote happening, but stay tuned because there will certainly be more to come.

[00:11:38] Justin Kendall: One of the things about Kraft is that unions are surprisingly rare within it. We saw anchors, workers succeed at forming a union, and they were on the verge of another contract when Sapporo made the decision to cease operations at anchor and liquidate the business. And we saw an effort at Surly fail. He came up, I believe, one vote short of being able to unionize there. The one example I think that we've seen management recognize the union is Fair State Collective in Minnesota as well.

[00:12:16] Jessen Fante: Yeah, and all of those three things have something in common that BUG did not. Those were all attempts to join existing organized labor forces. So in Minnesota, both breweries were trying to join the Unite Here Local 17. Unite Here is a hospitality workers union at Anchor. They were part of the ILWU, the, I'm going to get this wrong, but International Longshoremen, which is a long, long established union that certainly has deep roots in San Francisco. But BUG was new and the workers were trying to create their own organization. And they were taking a page out of the playbook that worked so well at Amazon in Staten Island. But that didn't quite work out down in Georgia. But really hard to build your own, you know, labor organization from scratch.

[00:13:04] Bernstein Autonomous: Yeah, and this was also plagued with some other internal issues and allegations of some of the leadership members being fired or other consequences because of their involvement with this. So just the trying to unionize alone, there's a lot going on there, but then also tackling any other things that might be happening in your workplace, it adds even more complications. Tough.

[00:13:31] Nadine Sarwat: This episode is brought to you by the Craft Brewers Conference, where big ideas, bold beers, and brutally honest shop talk collide. Join thousands of industry pros leveling up their game. Don't miss it. Register now at CraftBrewersConference.com.

[00:13:51] Justin Kendall: All right, let's round out the news segment with a little bit of catch-up coverage. I went to the Beer Institute meeting in Denver earlier this month, and one of the highlights for me was Dan Elkosmal's conversation with Mary Giver from Whole Foods and Matthew Crompton from CGA. And Mary's comments really stood out to me because We've seen a lot of folks try and get into the non-alcoholic beer space. And Mary is pretty much saying, look, we are near or very much at our limit of what we can take. We've got all the space that we can handle for non-alcoholic beer. And at this point, it's supporting the brands that they already have, who she said are some of their top brands, period.

[00:14:41] Jessen Fante: Yeah, which is super impressive. But I mean, I know we've seen recent comments. Oh, on our own Taste Radio, Bill Schufelt told our colleague Ray Latif that he thinks non-alcoholic beer could get to be 20% of the beer category.

[00:14:56] Justin Kendall: And he's an optimist.

[00:14:58] Jessen Fante: He's a very, very big optimist and good on him. I don't know that I see that, but I think what we're seeing there kind of jives a little bit with what Mary's saying is that there's only so much room on shelves. But NA brewers have one thing in their toolkit that they can play and that is DTC shipping.

[00:15:21] Bernstein Autonomous: I think it's also a nice reminder for when, I mean, we've been talking about all year, looking at the data, and NONALC has been one of the few segments within beer to record any sort of growth. And so a lot of producers are starting to look at it. We've heard a couple of announcements of some bigger players getting into NONALC this coming year. But just because a segment is growing in scans doesn't mean there's actually more room for it, or that that's going to continue, or that everybody can play in that space. So I think it's a little bit of a warning or a wake up call from Mary being like, hey, just we understand this segment is really important to us. It's really important to a lot of you. But don't get too ahead of yourselves there. There's only so much space we can really give you.

[00:16:08] Justin Kendall: One of the things that she also did say is, she's not trying to dissuade suppliers from getting into this space. She did say there are other paths in, so if you want to do this as a seasonal or a one-off, there's an opportunity potentially there, but it's also one of those where it's like, look outside of IPA and logger, you know, find your space. And maybe she brought up Oktoberfest or flavored hop waters or those spaces, which, you know, I think that would be a smart play for some folks. And it would be interesting to see that Some brewers treat this as a seasonal product where it comes in first half of the year, cycles back out, or maybe you have a couple of seasonals, you know, one for dry January, one for sober October, who knows? And the other thing that she brought up, and I thought that this was really powerful, was in a room full of some of the leaders of the biggest beer companies in the United States, and she's telling them that, look, there is a diversity issue in this industry, but there are producers who are women and who are black, indigenous people of color who are rising up in the industry and they're doing it at a craft level. And those are voices that need to be heard. And I think that that was an important message to send to everybody in that room who looked a lot like me.

[00:17:42] Jessen Fante: I mean, if everybody in that room hasn't heard that before, then I would question many things about them. But yes, for sure, absolutely needs to be said. It needs to be said until people actually start taking that into serious consideration.

[00:17:56] Justin Kendall: Yeah. And I'll just read her quote real quick. There is a ton of energy around the fact that there is just a missing component of the human population in the U.S. that aren't represented in beer right now. And what a great time to finally have this dialogue and start to support those brands. And it's happening at a craft level. They haven't had the support at a larger level historically. So here comes this wave of producers who are demanding to be represented in retailers and on tap. And I'm so excited to be a part of that conversation. And there's more to it. You can read it all at Brewbound.com. But the gist of this is, A lot of the younger voices out there need to be heard and they are critical to helping this category grow. It's not new news, but important message in that room.

[00:18:46] Bernstein Autonomous: Yeah. And I think people may be more susceptible to hearing it now because there's been more large scale representation of some of these brands with the creation of like the National Black Brewers Association. there seems to be like there's just more brands in general that are out there trying to directly combat some of the statistics out there of just how well represented some people are and some demographics are and ownership of breweries and all those other things. So there are some things that are moving towards trying to actually take some actionable steps and not just keep talking and having the same data points every year. And so I think Mary is trying to point to that and be like, hey, these are some actual direct people that you can look at and try to support right now. Now's the time, if you haven't been doing anything, look, there's people out there. We're not just kind of making this up.

[00:19:43] Jessen Fante: Yeah, man, as beer is losing share to spirits and people are drinking less, it just makes sense to go find people who haven't traditionally been drinking beer and try to welcome them.

[00:19:54] Justin Kendall: All right, let's play another round of tabbing out. And we've seen a lot of crossover beverages. Coca-Cola continues to get in this space. The next one up is Sprite and Absolute. It's going to be in Europe. We don't know when it's coming to the US, but are you here? Are you tabbing out, buying another round of Absolute and Sprite?

[00:20:18] Jessen Fante: Do we have a time machine to 20 years ago? Because that version of me, yeah, she's it.

[00:20:25] Bernstein Autonomous: Yeah. Yeah. I can't say I'm a big soda drinker, but when I would have soda, Sprite was normally the one I would go with as a teenager or a college student, and this 100% speaks to that version and that demographic, I think. I'll be interested to see if... It translates. I have a hard time seeing a lot of these can cocktails be adapted by consumers who are making their own just like makeshift mixer and spirit spaces. If they're switching to the can versions, I don't know. I mean, it's worked for Jack Daniels and Coca-Cola with their Jack and Coke RTD. Sprite and Absolute feels a little bit more makeshift to me, but I don't know. We'll see if people are into converting to ready-made versions.

[00:21:20] Jessen Fante: I hate this word, but Jack and Coke is iconic. I feel like iconic is mostly overused and usually not applicable, but in this case, I think it applies. Sprite and vodka, I don't know. I'm sure I've had many of them in the past. I mean, it's convenient. I think one thing that these RTDs do all have going on is that they're super convenient. In some cases, it's not something you can make that easily. Look at all of High Noon. You don't just have, say, watermelon juice kicking around. Yeah. It'd be easy to make like vodka, sparkling water, watermelon juice. Sounds tasty and I would like one right now, but it's not realistic to have that much different kinds of juices hanging in your fridge in the quantities that you would have to buy them in the grocery store. So yeah, HiNude. Great. Perfect. Very handy.

[00:22:13] Bernstein Autonomous: Yeah, I think there maybe this brings up the conversation that people might start having about like, how do you tell the line of convenience where it's almost going past that and you're not actually providing an added convenience? I feel like most people, if you're making a Sprite and Absolute, you care about your own quantity of each of those in your drink. They're two easy things that you can pick up at most stores around. But like you said, if you're looking for more flavors or more intricate cocktails, a canned version of that that's already made is so much easier. So I don't know if this is actually providing a more convenient option. It might be. We'll see.

[00:22:52] Justin Kendall: Are we fatigued on this? Is this losing its novelty of, you know, X big brand is now partnering with an alcoholic brand?

[00:23:02] Jessen Fante: Personally? Yeah. Yeah. But, and we pay much closer attention to this than any normal person does.

[00:23:08] Justin Kendall: Yep. Or should.

[00:23:09] Jessen Fante: So who knows? Yeah. Like the thing that I heard the most about from my friends was Jack and Coke. People were, seemed to be excited about that. Most other, you know, crossover RTD launches, I don't think get that much traction.

[00:23:26] Bernstein Autonomous: Yeah, I think it depends on how big the base of those two brands, like that consumer base is already and how excited they're going to be about having this. I think with this brand, the same as all the other brands that have come by, there's going to be a lot of initial excitement and momentum possibly. I think we are past that being long lasting or sustaining because it's not novel anymore.

[00:23:51] Justin Kendall: Mm hmm. Yeah, I think we're well past it. But I'm also way too close to this to know or have a good feeling for it. You know, so when you talk to your friends about Duncan and they seem excited or something, I think that sort of, you know, raises a flag for me. But I don't know. Like at this point, it's like everything is is Bevalk. If it's not already, it's going to be before too long. And then we're going to have to take Ozempic. So let's get into that conversation with Nadine Sarwat and Trevor Stirling from Bernstein. All right, let's welcome our guests, analysts and leaders at financial services firm Bernstein Autonomous. We have Nadine Sarwat. Thanks for being here, Nadine.

[00:24:39] Trevor Stirling: Thanks for having me.

[00:24:41] Justin Kendall: And we have Trevor Stirling. Thanks for being here, Trevor. Great to be with you. So in our space, in your space, there seems to be a lot of concern over the long term effects of Ozempic and other GLP-1 diabetes and diet drugs and how that might affect alcoholic beverage consumption. We've seen stories in the New York Times and Bloomberg. In your estimation, how much of this concern over these drugs' impact on alcoholic beverage consumption is either founded or maybe overstated at this point?

[00:25:16] Trevor Stirling: Well, that's the billion-dollar question. So I think it'd be actually helpful to answer your question to take a step back and consider how did we get here, because that's going to help us understand where can we go forward. So if we compare, you know, we now have the set of drugs, GLP-1s, if we look back, historically used perhaps for diabetes, that's where the origin was. And the side effect was weight loss. And so now we are seeing these drugs used for either people who are obese or overweight as a way to kickstart that weight loss process. And ideally you're doing that with the help of a physician and a support network. The side effect of that is in addition to losing weight, you lose the appetite for alcohol for some people. Now, this is where we start to get into the questioning. What does that look like? Is it the same for everybody? And that's why that's coming up so much. So if we look at how that's going to play out, we actually did a little piece of analysis. I'm going to consult some numbers to get those right here. So if we start with the, you know, how big is the population in America that's obese, well we have it at about 42%. So that's your core demographic to start with when we're starting to understand what the impact is going to be on alcohol. Then we get into the land of making assumptions to understand is this going to actually have an impact. So you have to make assumptions, for example, of those 42% of people who are obese, how many have access to these drugs, either through insurance or are willing to pay for it themselves. You then have to make assumptions about how long they are willing to stay on it. Sometimes we're seeing data that people last on 12 months. Others are saying they want to be on this for the rest of their lives. And so that's another assumption. After we have that, we have to go one layer deeper. Of the people who are on the drugs, how much are they actually cutting their alcohol? Then of that cut, volume-wise, it's not just frequency, but volume, how is that impacting? When we go through all of the layers and we put what we consider are some realistic worst-case assumptions, we get to an impact of about minus two percent on volumes over the span of 10 years. Now that's per capita consumption, I should actually add, or about 0.2 to 0.3 per year after you go through all of the layers. So this might not be the disaster that many people are expecting, but there are clearly a huge number of assumptions that we're making there. Trevor, anything to add?

[00:27:47] Sarwat and Trevor: Yeah, I think the first thing to say is GLP-1s aren't new. They didn't come yesterday. They've been used in the treatment of diabetes for quite a few years now. And it's really only in the last month or two that the feeding frenzy has sprung up about the threat to the alcohol industry. So I think the first thing to say Until a few months ago, nobody was raising this as an issue. I think that gives you some sense of there's a lot of people out there who have been treated for diabetes with GLP-1s, and we haven't seen dramatic reductions in alcohol consumption. So I think it's absolutely certain to say some people, if they take these drugs for weight loss, do have reduced appetite for alcohol. But all the maths that we've done so far says the impact on the total alcohol industry is likely to be relatively limited.

[00:28:34] Justin Kendall: What's different now? Why is it that at this point, if they've been around for this long, that over this last month or so, that we're hearing more about it, seeing more about it?

[00:28:45] Sarwat and Trevor: I think the first thing is celebrities. We have a lot of celebrities out there talking about it. It's a joke at the Oscars. So the whole awareness of the category has become much greater. I think also probably all of us know somebody who's tried Ozempic or Wegovy and we all know some person who has said, you know what, I don't want to drink as much as I used to. So I think that's part of it. I think there is also the whole category of drugs seem to be having more and more benefits. So there are clinical studies out there looking, can it help on heart disease? Clinical studies out there on addiction. It acts in two ways. One is to make you feel fuller. So you don't need to drink or eat and drink as much as you would do. But the second one is it interferes with the receptors in your brain and the whole dopamine. So for instance, if you smoke, the nicotine receptors in your brain that give you the nicotine rush, the dopamine rush comes from nicotine, potentially these drugs could interfere with those receptors. So they could reduce your appetite to smoke as well. So it's a very uncertain science at the moment about how these things are going to work. And when you get vacuums, people fill it with assumptions, and it's nearly always bad assumptions. People don't fill it with good assumptions.

[00:30:04] Trevor Stirling: And one thing I'll add to what Trevor said is what has changed, Justin, was your question. We've always had drugs around that physicians could prescribe for those with alcohol use disorder that would curb the desire to drink alcohol. So from that perspective, that side effect in and of itself of these GLP-1s is not new. So when we're thinking about how do we frame this for alcohol, well, we have to then think about the concentration of where is alcohol most likely to be consumed and how does that relate to GLP-1s. So if we do a sort of really broad scale scan of academic data, broadly in developed markets, we find that about 20% of the adult population drinks anywhere between 65 and 90% of alcohol volumes. Now, remember, that's the population. So if I were to do that number for the drinking population, which we know is about, in America, two-thirds, that would not be as sort of concentrated there, be a bit more spread out. But suffice to say, then the question becomes, when we're trying to understand what's new here with these GLP-1 drugs, How is the population of people who consume GLP-1 drugs, or are most likely to, overlap with that very highly concentrated area of sometimes what we'll coin, you know, power consumers of that category? And then we have two questions to ask, and this comes back, Justin, to, you know, what's new here. The first is, are people who, let's say, are more likely to be obese or overweight, and therefore more likely to consume these drugs, are they also more likely to be those power users of alcohol products? Data so far is pretty mixed. I know people that are the most athletic, and they drink more than me, and then I'll probably also know people on the other end of the spectrum, and academic studies are sort of not in agreement there. So that in and of itself would lend itself to say, look, maybe we shouldn't worry so much about GLP-1's impact on alcohol, at least versus other categories. The second is, does GLP-1's presence, as Trevor said, with celebrities actually lead to them being more mainstream, more socially acceptable than these other drugs that we've had for people who did want to curtail their alcohol consumption? That is still a big question mark. But that's how to think about what's changed now versus two years ago.

[00:32:23] Jessen Fante: So I'm glad you guys brought up the celebrity aspect here because, you know, the chatter about Ozempic and similar drugs in popular culture, at least in what I receive, because, you know, I think we all kind of get our own version of what's in the ether based on, you know, all the algorithms. But I mean, it tends to surround famous and almost famous women, which is not to offend any of the Real Housewives, but I think they're... They're a big part of this. So what do non-celebrity users of this drug look like? And then, I don't know that we can get there, but based on the demographics of those people, can we make any deductions about their prior alcohol of choice? So I think what I'm trying to ask here, is there a chance that this is more of a problem for, say, wine than beer?

[00:33:07] Sarwat and Trevor: What we know so far is that consumers who are using the drug for weight loss reasons tend to skew heavily female. And we also know that, in general, women drink less alcohol than men. Women are less likely to drink alcohol than men. So I think that's one thing we can say. When you get on to income, there's probably two things. I think there's people who are put on the drug for really valid clinical reasons. And we also know that obesity, clinical obesity, tends to skew lower income. But then there's people who are going on to the drug for lifestyle reasons. and they tend to be higher income, because if you're paying for it yourself, then these things are very expensive. So we're almost getting a barbell distribution, but definitely skews more towards female at the moment, and definitely then probably this mixture of very affluent and not so affluent people. know for beer that's probably relatively good news because if you like the classic Joe Sixpack is not in the target market here and probably will be the last of the people to adopt these drugs but you're absolutely right at the moment this is all completely anecdotal and there are very few facts out there but I have to say I'd probably be more worried if I was making Chardonnay than light beer.

[00:34:21] Trevor Stirling: And Jessica, you said anecdote. I have a good one for you. I went and got my haircut this weekend and was eavesdropping on the conversation of the people sitting right next to me. And the hairdresser was telling their client that his mom is actually on now GLP-1s and was raving about how much weight she had lost over a month period. Unless his mom is a celebrity that I'm unaware of, I suspect this is a very standard someone wants to lose weight and is using this as a way to kickstart that process. So down to Trevor's description to a tee.

[00:34:52] Jessen Fante: Wow. So I was just pregnant and during that time I had gestational diabetes, which is something completely different. It comes to your placenta and all of that. You know, it goes away as soon as you have the baby, which it did, thank goodness, but I must've just Googled. I don't know if it's because of me Googling the gestational diabetes, what can I eat? What do I need to know? Or just being a 38 year old woman, but I get bombarded with ads for Ozempic. on every social app, everywhere I go, all I see is just ads for Ozempic all the time. So, I mean, Zoe, you're nodding, so I assume maybe you are also getting this. So maybe it's not the gestational diabetes.

[00:35:29] Bernstein Autonomous: No, I think it's definitely I mean I would concur that we've just personally have observed similar things of just it's being leaning a lot towards women towards that like right around Jess's age like it and I'm also seeing in my 20s seeing them everywhere so it's definitely in the ether kind of in all spaces that you're looking I'm curious, we've heard, I mean, there's been, I know this is a drug that is used for actual medical reasons, but because it has that kind of social aspect to it, we've seen other diets and weight loss fads happen over the years. How does this one and its effect on alcohol consumption differ or does it not versus previous ones? What makes this one a little bit different?

[00:36:17] Sarwat and Trevor: I think the first thing is it didn't cost you anything to go on the Atkins side. If this is going to cost you $1,500 a month, that's very, very different. And so I think that you've got this thing of the Where it's being used for a real clinical and you want your insurance company to pay for it, they're going to ask you to go through all sorts of hoops first before they'll pay that for you. Have you tried diet? Have you tried exercise? They'll oblige you to have it as part of a clinical program being administered by a doctor. If you're doing it lifestyle reasons and you're going to a pharmacy and buying it off label in the grain market, that's a very different world. At the moment, according to the companies, they can't make enough of it. So I think we're getting the situation where we're going to see appeals go out to people, don't use it for lifestyle reasons, because there isn't enough for the diabetics who really need it for life-saving reasons. So there's a really interesting whole set of things how this pans out, which means it's in such a different category from previous things like the Atkins diet.

[00:37:21] Trevor Stirling: Yeah, Joey, one thing I'd add is, remember, if we look at the history of diets, which I also think is a fascinating topic on the side, they were largely also based on willpower. Cut carbs out for a week and you'll binge your carbs on Sunday. Or cut your alcohol out. And here it's the opposite. You're taking a drug that is actually cutting the desire at the source. And so it's not a consumer-led cutting, it's drug-led cutting, if you will. And that's quite different. We hosted a panel of consumers last week who are on the drug and the data was mixed on what some people did or didn't do in terms of cutting their alcohol. But when they described other foods like greasy foods, it was actually just that it was unappealing to them. And I think that's the key difference. And then we get into the debate of, well, how long are you staying on this? which is the other big question. Are you staying on this for 12 to 24 months? You're using it to kickstart a more healthy lifestyle, to bring your weight back down, and then you have to try somehow and maintain that afterwards with the help of your physician. But that craving for alcohol will come back. So that's also the key question, or are we on it forever? And that's probably the one biggest difference between any other diet that we've seen where cutting alcohol is recommended.

[00:38:36] Justin Kendall: You mentioned that panel with users. What did you learn as far as alcoholic beverage consumption and what they were saying as far as whether they were finding alcoholic beverages appealing or just having a distaste for it at this point?

[00:38:54] Trevor Stirling: Yeah, I point to two interesting things. So on the panel, it just so happened that the people we were interviewing, most of them weren't heavy drinkers to begin with. So it wasn't a big change for them to maybe lose that appetite. There was one person who was drinking just as much beer, ironically, and did not give that up, but was cutting down portion sizes for food elsewhere. Another interesting data point was we held a call with a former exec at Walmart, and they had data as well, they found that Trevor correct me if I'm wrong I think it was a 60% reduction.

[00:39:28] Sarwat and Trevor: 60% of people said they had less appetite for alcohol, but very importantly, it didn't say how much was the reduction in alcohol. So the only evidence we know for sure is if you have rats in the lab and you make them alcoholic, then they have a reduced appetite for alcohol. So that's the only scientific fact out there. But there is an awful lot of anecdotal evidence. There is some reduction in appetite for alcohol. I've seen some numbers that vary between 10% and 60%, depending on the study, but there certainly is some reduction in appetite for alcohol. But we have no idea, do beer drinkers have a bigger reduction than spirits drinkers or wine drinkers? So is it a function of the type of alcohol you're drinking? I suspect it's much more a function of the type of person who's taking the drugs. So coming back to the point before, Jessica, about who's going to end up taking Azempic. And very important, as Nadine said, who's going to end up staying on Azempic? Because a lot of consumers don't like the idea of being on a drug forever. This clinical evidence probably says after two years on the drug, you can come off and keep those good habits in terms of lifestyle and diet and choice. So if we have a bunch of people that try the drug, some never stay on it, some stay on it for two years, but then they go back to their own alcohol habits, then it's even less of something to worry about than what we think at the moment.

[00:40:55] Trevor Stirling: Yeah, I would add the one other thing I took away which maybe is an outpost specific but gives you an understanding of, you know, how does it work for some of these consumers is, I really came away with the view that it's not a magic pill. What it does is kickstart weight loss and kickstart better habits. such that you can try and reduce portion sizes and understand what that feels like and understand what it's like to be full, such that when you come off in two years, you can continue those. But some of the people we had spoken to who came off after one year said those hunger pains come back because the way you lost the weight is by being in a calorie deficit for a year. And all of a sudden, you have to learn how to actually manage your hunger, your appetite when you didn't have to for a year. Bringing this back to alcohol, it shows that actually a lot of those habits can come back afterwards. Those desires all come back. And this isn't a magic pill that erases our desire for sugar, salt, fat, alcohol altogether. It's a tool that's being used, but it doesn't erase everything.

[00:41:57] Jessen Fante: So it sounds like, you know, with a lot of stuff right now, it's a little too soon to tell, but what time period would you both consider long enough for all of us to have a better grasp on the situation?

[00:42:08] Sarwat and Trevor: Probably within six months, Jessica, we'll have a lot more numerical evidence, robust numerical evidence about who's actually taking the GLP-1s, what type of person are they, to what extent do they drink or not, and to what extent that changes, and particularly by category. But what's probably going to be really critical will be the longevity of the change in habits. And so that's, I mean, if arguably a Zempig as a weight loss drug is something that started six to 12 months ago, it's probably going to be another year at least before we start to get the evidence of how does this change over time and what are the patterns of behavior over time.

[00:42:50] Bernstein Autonomous: Is there any early reading right now of what the length of usage is at all? Are you seeing like, is it still in that period where a lot of these, a lot of this usage is just people getting the prescription for the first time or are we starting to see some repeats in there?

[00:43:07] Sarwat and Trevor: I would say so far, we're looking at at most 30% of people are staying on the drug. So there are quite significant side effects here in terms of either constipation or diarrhea, unpleasant side effects that cause people to come off. There are some people just bad at following drug regimes. And for the moment, the GLP-1s for weight loss are injected. So you have to self-inject once a week. Now that may change because there are GLP-1s for diabetes that are in tablet form. So that could well change. There are people who said just be bad, because not everybody takes their pills, even things like heart medicine, where you just don't take the pills as often as you should, or you stop. And then there'll be people who achieve the goals and stop. So the evidence we've seen so far say, if you end up with 30-40% of people for more than one year, that's probably what we should be expecting.

[00:43:59] Trevor Stirling: and probably also to consider is who are those people? If these are all people who have been prescribed by their physician for weight loss because they are obese or overweight, that's going to be very different to, you know, Jessica and Zoe, what you're describing is your celebrity influence. I sort of want to just lose five to 10 pounds. This is a quick, easy way, in which case my hunch, and this is just a hunch, is that group of people adherence is probably going to look very different to someone who is taking this for medical reasons per recommended by a physician.

[00:44:34] Justin Kendall: I don't know anybody at the top of the year that probably had weight loss drugs on their bingo card of headwinds for alcoholic beverages. But in your conversations, since this is sort of popped up with leadership at some of the top manufacturers, what are you hearing from them? Is there concern? Are they just feeling it out at this point? What's the read you're getting?

[00:44:58] Trevor Stirling: What I'm hearing from my American alcoholic beverage companies is both too soon to tell, and we're not really seeing anything yet. Now, who knows? I'm sure they're having plenty of discussions on this internally, but that comes back to Trevor's questions, that there are more unknowns than known at the moment. But at the moment, not seeing a huge impact is what they're saying, at least in alcohol.

[00:45:24] Sarwat and Trevor: I think they're all slightly bemused, Justin, having talked to a lot of them. They're going, where did this come from? Why are people worried about it? What are GRP ones? So I think they're a little bit like us, a lot of them, which tells you something in itself. It's given that these firms tend to have large numbers of people worrying about the health implications of alcohol and worrying where legislation might go. And the fact that they're not worried about it tells you something in itself. So clearly, anybody can be prone to complacency. I think where it is, is investors tend to sort of shoot first and ask questions later. So they tend to worry about what's around the corner rather than what's in the here and now. So I'd say the investment community is much, much more worried about this. I think that's partly because you might be, let's say, as an investor, you can invest not just in alcohol companies, but in many types of companies. You might be thinking of investing in a chocolate company. And if you're really worried that, let's say, 10% of the population is consuming 50% of the candy and they all go on Zembic, that could be a big problem for you if you're a Chot investor. So then if you're in that mindset already, then you tend to think, oh, well, what about other things that could be hit? So we already have seen, for example, companies making medical equipment have big impact on their share prices because of anxieties about GLP-1s. And I think what we're seeing is the ripple of that spreading across the financial markets. That's a long-winded way of saying that companies are relatively calm at the moment. It seems to the investment community that's more of a tizzy.

[00:46:55] Trevor Stirling: You know, Justin, to put this in perspective, we have investors asking us for our best Ozempic proof pick for a company to invest in, which is telling you what type of mentality they're in when trying to understand everyone's exposure to this.

[00:47:09] Justin Kendall: Did you get asked what best beyond meat pick you had, like when that was becoming a thing a few years back? No, no, no, no. All right. Just curious if there was like a corollary.

[00:47:25] Sarwat and Trevor: I suppose probably the best was coming back to, Zoe, you mentioned the Atkins diet. And clearly there are, we know some big beer brands out there make a bigger thing about being low carbs. And I go all the way back to I think Miller Lite was less carbs, I've forgotten the strap line. Tastes great, less filling. Tastes great, less filling. And when did we see carb side by side in terms of carb levels coming into ads? So maybe that persists. I still hear a lot of people say, I drink tequila soda because it's gluten-free. And you go, well, you know, all spirits are gluten-free. Really? So the level of consumer knowledge out there is small. So I can understand why investors are worried or concerned. But I think the probability of something big coming out of this is very low at the moment, based on what we know.

[00:48:19] Jessen Fante: Now we mostly focus on the U.S. beer industry, but you guys have a broader view than we do. So is this more, is concern here mostly concentrated in the States or are other countries worried about it as well?

[00:48:30] Sarwat and Trevor: It's very much U.S. oriented because if you think about the obesity levels, it's 42% of U.S. adults In the English-speaking world, in the UK, Australia and New Zealand, it's about 30. In continental Europe, it's 20. And most emerging markets, it's 10 maximum. I think Mexico is the one emerging market that has more of a problem with obesity. So in general, outside of the U.S., it's on the radar screen, but it's much less significant in terms of the intensity of the dialogue, shall I put it that way.

[00:49:05] Trevor Stirling: And then maybe the last comparison to make, not only the differences in obesity rates, but, you know, the health care systems are incredibly different. And what is the implication for how do you get access to these drugs? And that could be a whole hour conversation in and of itself, and it goes both ways. But, you know, what are consumers' attitudes to weight loss? or, you know, the latest trends. And I think those are also very different. So main one that Trevor highlighted is, you know, absolutely number one, but there are a lot of other differences under the surface too.

[00:49:34] Justin Kendall: Well, I think this is a fascinating discussion and looking forward to seeing where it goes. Thank you, Trevor and Nadine for joining us. We really appreciate it.

[00:49:43] Sarwat and Trevor: Thank you.

[00:49:45] Justin Kendall: And that's our show for this week. Thanks to Trevor and Nadine for joining us. Thanks to Zoe and Jess for all they do. Thanks to our one man audio team, Joe. And thanks to all of you for listening. We'll be back next week.