Weight loss drugs have been in the spotlight. But they’re just one aspect of a growing focus on health — on the part of both consumers and governments. The Covid-19 pandemic was a big factor behind the rising focus on weight and its implications for health, Morgan Stanley noted. “Thus health (or wellness) has become more of a driver of weight loss than the desire to conform to a certain appearance; we note that at the same time as the rapid rise in weight loss drug adoption, there has also been a strong movement (supported by social media) to destigmatise obesity and encourage body confidence,” it wrote. Wellness goes beyond weight loss — it also encompasses fitness, nutrition, appearance, sleep and mindfulness, the bank wrote, citing a McKinsey survey, which showed showed that millennials are focusing more on those factors. The bank noted that the increase in health-care spending — both in absolute terms and as a percentage of gross domestic product — has increased the focus on implementing policies that address those issues. “Even before GLP-1s hit the headlines, developed markets policy was shifting to a more interventionist approach to consumer health,” Morgan Stanley wrote in a Nov. 1 report, referring to glucagon-like peptide-1 drugs originally developed for diabetes but also popularly used for weight loss. “The cost of treating obesity-related diseases, and the loss of worker productivity, makes continued intervention likely, in our view,” the bank added. Such drugs are also affecting dietary habits: Walmart said last month it is seeing a “slight change” in the way people shop for food , which may be due in part to customers buying less while using appetite-suppressing medications like diabetes drugs Mounjaro and Wegovy. “While the perception may be that the US has been leading the way in the adoption of weight loss drugs, Europe has become relatively more interventionist from a policy perspective, in the form of increased taxes/restrictions on products that are deemed unhealthy, and strategies designed to push the broader population towards better health,” Morgan Stanley said. Tech Zone Daily Pro takes a look at the stocks Morgan Stanley says will be affected by those trends — both positively and negatively. Beneficiaries Morgan Stanley said “functional” foods, waters, skincare and cosmetics, and consumer health should be well positioned. The wellness trend should be positive for companies that focus on nutrient-dense foods, such as protein powders and other protein-enhanced foods like premium yogurts, the bank said. French food producer Danone is well positioned for the “global shift to wellness,” the bank said, adding that all three divisions in the company could benefit: essential dairy and plant-based products; water products; and specialized nutrition. Morgan Stanley upgraded its rating for Danone to “overweight.” It also reiterated its overweight rating on Glanbia — a major manufacturer of protein powders in the United States — as well as Nestle , which it said should be “broadly neutral” to the GLP-1 debate. But the bank said Nestle has the potential to capture upside in the wellness trend through its nutrition division, which produces protein powders and supplements. The bank said the “personal care” category should continue to benefit, thanks to the “increased association of looking good with feeling good,” said the bank. “We think the “medicalisation” of skincare will continue, with increased uptake of active/dermatological products, including SPF, as skin health importance grows,” it added. It listed L’Oreal , Beiersdorf and Intercos as key beneficiaries. “We note also that consumers spending less on grocery will have more disposable income, mitigating near-term concerns that some investors have around spending on the more discretionary beauty category,” said Morgan Stanley. At risk Alcoholic beverages and soft drinks appear to be among categories most affected by the GLP-1 trend and the focus on wellness, Morgan Stanley said. That’s because medical studies have shown that GLP-1 drugs can be effective in reducing alcohol consumption and relapse-drinking behaviors, the bank said. Alcoholic beverage companies in its list of stocks with an underweight rating include Diageo and Remy Cointreau . Beers should be the least affected, Morgan Stanley said. “GLP-1 uptake currently skews heavily towards women, which suggests that beer consumption, which skews male, should be less impacted, at least in the short to medium term.” Brewer Anheuser-Busch Inbev is the best positioned, it said. As for soft drinks, there’s been a “notable shift” toward low- or no-calorie drinks, which should “soften any potential impact,” the bank said. British soft drinks producer Britvic should be better positioned than Fever-Tree, which produces mixers and could be affected by weakness in the spirits category. — Tech Zone Daily’s Michael Bloom contributed to this report.