The decades-long ride on a wave of high-calorie exports leaves New Zealand’s food producers vulnerable to weight loss drugs.
Food, glorious food - NZ's dairy & red meat export boom
New Zealand, with its population of 5.2 million, has the capacity to produce enough food to sustain 40 million people. Over the past two decades, a significant portion of this surplus has been exported to China. As China's income levels have risen and access to imported food has improved—thanks in part to trade agreements—there has been a noticeable shift towards a preference for tastier, higher-calorie, and increasingly affordable foods. This shift aligns with human evolution, as our bodies are naturally inclined to crave and store calorie-dense foods. In this context, New Zealand's premium milk, butter, cheese, beef, and lamb stand out for their exceptional taste and quality. Since 2000, the value of these nutritionally-rich products has roughly tripled, and by 2023, nearly half of New Zealand’s food exports—primarily calorie-dense dairy and red meat—were exported to China.
In this period, an average Chinese citizen’s food intake shot up by over 550 calories a day to more than 3,400. That puts China almost on par with the EU, though still well behind the USA’s average of 3,900 calories a day.
All those calories
Data from China indicates that the prevalence of obesity in adults in China more than doubled between 2004 (3.1%) and 2018 (8.1%). Based on the estimated 2018 prevalence, obesity affects approximately 85 million people in China. This is close to, and likely to soon surpass, the US’s 100 million overweight consumers. More than half the adult population of both countries – well over half a billion people – are now estimated to be ‘overweight’ (distinct from ‘obese’).
With roughly one-third of its population counted as obese, New Zealand is in good company.
In China, extensive regulations govern food consumption, including national health guidelines that advocate for reduced intake of high-calorie, sugary, and fatty foods. Public health campaigns have long highlighted the risks of obesity, and school lunch programs now offer healthier meal options. Additionally, the development of parks, pedestrian pathways, and bicycle lanes promotes walking and cycling. The government is also tightening controls on the marketing and availability of high-sugar and high-fat products, particularly those targeting children.
Despite the implementation of these measures in China, and similar ones for many years more in the US and other developed countries, rates of obesity have continued to rise.
This will change.
Hello Ozempic. Goodbye cheese?
If trends in the US are any indicator, weight loss drugs will drive this change. Ozempic, originally developed for managing diabetes, has gained renown for its remarkable weight loss benefits. It works by enhancing insulin secretion, reducing appetite, and slowing gastric emptying, which together promote weight loss. Ozempic, and similar medications, do not work by allowing users to eat more; rather they make the user want to eat less. Other brands from different manufacturers function in similar ways, effectively short-circuiting the evolutionary impulses that drive us to overeat. The list below is just what’s in the FDA pipeline for approvals; there are an unknown number of other copycats and fake products already in use in the US, UK and Europe.
Medication | Dosage form | How it works |
Contrave (naltrexone / bupropion) | Tablet | Lessens hunger and manages cravings |
Qsymia (phentermine / topiramate ER) | Capsule | Lessens hunger and manages cravings |
Orlistat (Alli, Xenical) | Capsule | Blocks fat absorption from your diet |
Phentermine (Adipex-P, Lomaira)* | Tablet or capsule | Lowers appetite |
Phendimetrazine* | Tablet or capsule | Lowers appetite |
Diethylpropion* | Tablet | Lowers appetite |
Benzphetamine* | Tablet | Lowers appetite |
Zepbound / Mounjaro (tirzepatide) | Injection | Lowers appetite and food intake, helps you feel full |
Wegovy / Ozempic (semaglutide) | Injection | Lowers appetite and food intake, helps you feel full |
Saxenda (liraglutide) | Injection | Lowers appetite and food intake, helps you feel full |
Users of weight loss drugs don’t get to eat more; they desire to eat less.
Little is known about the long term side-effects of the legitimate drugs , let alone the consequences of using fake ones. But the rapid rise in uptake suggests that alerting people to risks of nausea, vomiting, diarrhoea, and constipation (the common side-effects) or less common issues like gallstones, hypoglycaemia, pancreatitis or even thyroid tumors (yikes!), doesn’t deter many people from the well-documented promise of a 15% loss in body weight that 8 out of 10 users can expect, if they stay on the drugs.
Upending the food economy – drugs that will save users money
As of 2024, about 12% of U.S. adults have tried weight loss drugs such as Ozempic, Wegovy, Zepbound, or Mounjaro. This equates to roughly 31 million people, with 6%, or around 15.5 million, actively using these medications. The cost is a significant factor for many, with prices reaching up to $1,000 a month (approximately $30 a day), making it difficult for some users to afford these products.
However, this is set to change with increased scale. In June 2024, following Eli Lilly's announcement of a US$5.3 billion investment to expand its Mounjaro manufacturing capacity, Novo Nordisk, the maker of Ozempic, announced a US$4.1 billion investment in the US to increase its own production volumes. Although it is too early to predict how quickly prices will fall, the combined efforts of expansion by these industry giants, along with smaller brands, generics, and even counterfeit products, suggest that prices will indeed decrease. Historically, the price of pharmaceuticals tends to drop to about one-tenth of the original price once patents expire. If the same dynamic were to occur for weight loss drugs, it would potentially bringing their cost down to around US$3 a day. Cheap, no?
But well before falling to this price, an important milestone will be achieved: Big Mac equivalence.
Big Mac Equivalence
A typical user of these new-generation weight loss drugs will consume 500 to 1,000 fewer calories per day compared to their previous intake. Calories can be inexpensive when purchased from a supermarket or costly when dining at a good restaurant. At 590 calories, a Big Mac* represents a conservative estimate of the daily calorie reduction for weight loss drug users. With an average price of US$4.60, a Big Mac also falls between supermarket and restaurant prices in terms of affordability. Moreover, since everyone knows what a Big Mac is, it serves as a convenient benchmark.
(*The Big Mac is used here for convenience, not because we believe McDonald’s will be adversely affected. In fact, we expect that McDonald's and other food service providers could benefit from this trend. By downsizing their portions, they can save on ingredients and delivery costs while maintaining their current price points, thereby potentially improving profits.)
As manufacturing capacity increases and more competitors enter the market, prices will fall. When the cost drops to US$5.00 per day, the expense of reducing calories will match the money saved by not buying the food that gets cut (eg. a Big Mac), effectively making weight loss drugs financially neutral for users. Then, as the daily cost of these drugs falls further, below US$5 (the average price of the calories that are avoided by using the drug), users will not only be looking better and avoiding known health risks of obesity; they will be saving money.
Once prices fall below the crucial five-dollar mark (equivalent to the cost of an average 500 calories), users will actually save more money on their reduced food bill than they spend on the medication:
Monthly saving in food not eaten: $5 x 30 days = $150
- Monthly cost of the drug: $4 x 30 days = $120
= Monthly financial gain for the user: $30
Looks like a pretty good deal.
Then it's off to the races
Healthy food is known to be more expensive than super-processed alternatives, leading to disproportionately higher rates of obesity in low socio-economic groups. This segment also represents the majority of potential future users of weight loss medication and share the same desire to look and feel good as current (wealthy) users do. As these medications become more affordable, not only is the economic barrier removed, but there is also a financial incentive for low-income individuals suffering from obesity to start using them. They will become wealthier by doing so.
Imagine the market transformation. If just half of the U.S.'s 100 million obese population used some form of weight loss medication and reduced their intake by 500 calories a day, it would result in $81 billion less food consumed annually in the U.S. (using the Big Mac as a measure for the dollar value of 500 calories).
China, with its rapidly increasing caloric intake, a comparable number of obese citizens, and a government committed to addressing the issue, is likely to follow this trend.
The Biggest Losers will be NZ’s farmers
Consumers on weight loss drugs simply eat less. They experience reduced appetite and cut 10-15% of their daily caloric intake. Excellent news for users, but not so great for New Zealand's food export industry. For an economy built on food, particularly the delicious, calorie-dense products that New Zealand farmers excel at, reduced appetites and smaller portion sizes will mean a decreased volume. This will impact markets in proportion to their rising use of weight loss drugs.
Approximately half of New Zealand’s total exports are dairy and red meat, making the country highly vulnerable to the knock-on effects of weight loss medications. The central role of food in our economy means that the impacts will extend beyond the food industry, affecting the broader economic landscape.
Less demand for NZ red meat & dairy exports
New Zealand's exports of products such as meat, dairy, and specialty foods—major components of our export economy—are set to be impacted. Prepare for a 10-20% reduction in volumes to markets where weight loss drugs are widely used.
Shift in Food Preferences
Predicting shifts in food preferences is challenging due to limited data on the types of foods weight loss drug users abandon. Exporters need to work closely with their distribution partners and conduct their own market research to stay abreast of changing dietary habits.
Economic Impact
The reduction in demand for food exports could lead to decreased revenue for New Zealand’s agricultural sector, depending on how quickly enterprises adapt. This will particularly affect companies most reliant on bulk exports and least inclined towards innovation, either due to their small scale or organizational culture.
Adaptation Strategies
New Geographies
For years, the government has encouraged New Zealand exporters to diversify beyond the single market of China. The US has been a common alternative and now ranks as the second biggest destination market. However, the US is also at the forefront of weight loss drug adoption, which will increasingly undermine exporters’ efforts to mitigate geographic risk. Other markets in Asia, Europe, and elsewhere may mitigate the impact of reduced demand to the extent that they are latecomers to the weight loss drug trend.
Innovation
Opportunities will arise as New Zealand exporters adapt by offering products and packaging that better align with changing dietary habits. These products must be of higher per kg value than those being phased out. Significant effort will be needed to match consumer desires with innovation pipelines that have yet to be built. This will be an existential challenge for many smaller food businesses.
Branding
Branded products command a price premium because they stand out, feel familiar, connote trust, and provide a shortcut to decision-making and loyalty. Medium sized New Zealand exporters will dabble in brand-building, but their approach will be cautious and frugal, and therefore yield disappointing results. Creating and supporting a brand in overseas media and trade is expensive and often well beyond the means of many smaller exporters.
Aggregation
New Zealand food producers, processors, and exporters have always faced the challenge of geographical distance. Flattening growth and potentially falling volumes in markets like the US and China may push many exporters back to smaller domestic markets (capacity surplus, lower prices) or make them unviable altogether. Aggregation—via collaboration, joint ventures, and acquisition—will bring scale, enabling a critical mass of investment in innovation and branding that would otherwise overwhelm a small or medium-sized exporter.
Peak dairy and peak red meat – both off the menu
Suppressed appetites will mean less demand for high-calorie foods like dairy and red meat, The path forward demands sector consolidation, product innovation, and stronger branding. For smaller food businesses, managing these challenges will be critical to their survival.
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