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Financial Paradigm Shifts in the Making
Have you heard of Ozempic? Are you taking Ozempic? If you aren’t you might be soon. According to Morgan Stanley, by 2035 7% of the U.S. Population will be on Ozempic, or an appetite suppression drug like it. Should snack companies be worried? The CEO of J.M Smuckers isn’t. The future owner of the Twinkies brand, the Wall Street Journal reports that Mark Smucker thinks that Americans are never fully going to lose their sweet tooth. The Chief Financial Officer of PepsiCo agrees, according to Reuters, and is not seeing any negative impact yet for their snack business. Conagra, on the other hand, is considering changing the portion sizes of their snacks in response to the impact of these weight loss drugs, while Walmart expects their health and wellness products to actually increase in the second half of the year due to the trend. Bloomberg actually quotes the CEO of Walmart’s US Operations as saying that there is a “slight pullback in the overall basket” for their shoppers of food. This could be related to weight loss medications, or it could be just consumers pushing back on the high cost of food.
There is no doubt that Ozempic is having a huge impact in Denmark. The New York Times reports that sales at the parent company, Novo Nordisk, have pushed the market capitalization of that company higher than the value of the entire Danish economy, and it is now the second largest publicly traded company in Europe. This company, who launched Ozempic as a diabetes drug, has now seen the application of it in the weight loss market making it one of the most formidable pharmaceutical companies in the world.
The Ozempic effect is a reminder to me how quickly a paradigm can change. When the iPhone came out in 2007, it was a paradigm altering product. The iPhone changed the way everyone in the world does life. It is possible that Ozempic could be one of those watershed products that also changes life as we know it. What it might cause is a seismic shift in American culture toward an even greater focus on health and wellness. Successful appetite suppression is a game changer and serves as a catalyst to launch millions of people into a world where they don’t just eat less, but where they are catapulted into thinking more carefully about what they eat and about adding exercise to their new eating routines. The financial implications of this shift will affect cities and towns dramatically. The cities that have greenspace, greenways, and other ways to get fit in community with other people are going to have an advantage. And the towns that have a broad offering of places to eat that add healthy spots alongside greasy spoons will also have a leg up. As West TN readies itself for the growth coming from Blue Oval City, those towns with a fitness friendly tone may find themselves more likely to grow than those who don’t. Small businesses will also be impacted by this paradigm shift. Those small business owners that invest in opportunities for their teams to pursue fitness may have a slight edge over their competitors. It’s too early to precisely quantify the Ozempic effect, but I think it will be significant.
What about the Elon Must effect? It seems everywhere you turn, Elon Musk is doing something bold and at times audacious. One of his latest attempts is to build his own town. That’s right, just outside Austin Texas, Musk has purchased thousands of acres of pasture and farmland that is set to be the future sight of Snailbrook, a community very near two companies that Musk owns. The Wall-Street journal met with landowners, real-estate agents, and Musk employees that described his vision for this town as a kind of Texas Utopia sitting alongside the Colorado River. He would have his own private residence that would be slightly outside the new town. Now what would be the advantage of an employee of Space X living in a town like Snailbrook? The first benefit is a short commute. Perhaps the most significant is cheaper housing costs. In a county where the average rent is $2200 per month, employees of of Musk’s companies could apply for rents as low as $800. It’s a bit of an experiment, and harkens back to the days of company towns.
West TN is no stranger to company towns. Bemis is a town in South Jackson that was built in 1900 by the Bemis Brothers Bag company around their cotton mill. Although employees were not required to live there, it was certainly nice to be able to walk to work and live in a town that was designed by a graduate of MIT. At the time there was a local school, church, auditorium and post office for the company town. You can still see many of these buildings and homes if you go there today. And although Blue Oval City is not a company town in the same sense of the word, nearby communities are certainly looking for ways to host the people that will be working there. So in some ways, what is old is new again. In an age when more companies are looking for ways to vertically integrate, becoming less dependent on suppliers and vendors overseas, the idea of company towns may be revived.
An old concept that we think will never go out of style is that is good old-fashioned customer service. As companies get bigger, the ability to do business with a name and face that are familiar is going to get harder to come by. We believe there is great value to knowing your bank and your banker, and so at MBC/Foundation Bank, we strive to build meaningful relationships with our clients. We want to understand what you are trying to accomplish with your finances, and we want to give you solutions to help you get there. If you are looking for that kind of bank, we invite you to start a conversation with us today. And since I mentioned relationship, why don’t we start that conversation in person. You can see how to contact teammates in all six of our West TN markets by visiting foundationbank.org/contact. If you’ve found this podcast helpful, we hope you’ll subscribe to it in your favorite podcast app and share it on social media. Until our next episode, God bless you.
-President Chad P. Wilson, CFP
Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of McKenzie Banking Company / Foundation Bank on October 24, 2023. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. Any rates mentioned are subject to change and are accurate as of the recording date. MBC/Foundation Bank is an Equal Housing Lender, Member FDIC.