Dsm-firmenich sees boost as weight-loss drugs spur healthier choices

By Dimitri Rhodes and Matteo Allievi

(Reuters) -The soaring popularity of weight-loss drugs are likely to spur demand for dietary supplements and healthier food formulations, creating growth opportunities for dsm-firmenich, the CEO of the flavours to nutrition company told Reuters.

Drugs such as Novo Nordisk’s Wegovy and Ozempic have taken the health industry by storm, offering the prospect of significant weight loss for obese people when combined with lifestyle changes such as healthier eating and exercise.

“Everybody is super happy about Ozempic and the likes,” Dimitri de Vreeze said in an interview, noting a shift towards preventative healthcare impacting not just consumers but also insurers and governments.

Dsm-firmenich, whose Health, Nutrition and Care unit makes dietary supplements and medical nutrition products, is well placed to help the switch to healthier lifestyles, he said.

“People who lose weight very quickly find it very difficult to build up muscle and therefore protein intake is absolutely key, as well as absorption of nutrients,” he said.

Berenberg analyst Sebastian Bray notes that any boost for flavours and ingredients makers from products linked to weight-loss drugs would need to outweigh the potential hit to business with makers of high-calorie foods and beverages, such as snacks, takeaway meals and fizzy drinks.

However, de Vreeze said he expected innovation in new ingredients, such as sugar substitutes, to support growth in an environment of decreasing calorie consumption.

Dsm-firmenich last week set a target for underlying sales to increase at a compound annual rate of 5-7% by 2028, similar to peers such as Symrise and Givaudan. The upper end implies a “faster growth rate than for both the ingredients sector and consumer staple sectors as a whole,” Bray noted.

The company, whose fragrances are used in the perfumes of French luxury giants LVMH and Kering, also sees a boost from a renewed interest in scents among the young.

“The world is in a pace of change where the younger generation finds their identity and their wellbeing through fragrances and beauty,” de Vreeze said.

To focus on perfumes and flavours, the group is planning to carve-out its Animal Health and Nutrition division by the end of 2025, following a 76% plunge in that business’s core earnings last year.

De Vreeze said the company was exploring strategic options for the division including an IPO, a sale, or a joint venture in which it would have a minority stake, which it would then gradually unwind.

(Reporting by Dimitri Rhodes and Matteo Allievi; Editing by Mark Potter and Susan Fenton)