US food sector affordable, but caution advised due to potential headwinds from GLP-1 drug uptake

From Investing.com: 2025-01-11 06:30:00

The US food sector is trading at its most affordable level in over two decades, but caution is advised due to potential volume headwinds from GLP-1 drug uptake and consumer shifts away from processed foods. Improved consumer sentiment among low-income households is a positive sign, while regulatory challenges may arise, especially with potential policy changes from Mr. RFK Jr.

Monitoring FDA shortage lists in 2025 is crucial as GLP-1 drug uptake affects processed food consumption, potentially impacting sales in the QSR channel. Regulatory challenges may arise, especially with potential policy changes from Mr. RFK Jr. Analysts highlight surging commodity costs like cocoa and coffee, suggesting increased promotional activities may be needed to support volumes. M&A activity is expected to continue, with Simply Good Foods identified as a likely acquisition target. Top picks in the sector include Mondelez, McCormick, Simply Good Foods, and Hain Celestial for long positions.



Read more at Investing.com: US Food outlook for 2025