Are GLP-1s About to Kill the Alcohol Industry?
Change is definitely coming, but not in the way you think
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Brain rot is real, and stepping away from your phone is probably one of the sanest things you can do. So, that's exactly what I'm doing, a 10 day silent retreat, completely off-grid. And obviously, I'm telling you about it in advance because what's a digital detox without the irony of announcing it online first?
That means no digest for the next two weeks.
But before I disappear, this week’s edition somehow turned into a full-blown essay. I promised myself just a quick roundup of the news, but as usual, I couldn’t resist going down the alcohol rabbit hole.
If you'd like to shoot me a message in the meantime, I'd love to come back to a few notes from you.
Thanks, and see you on the other side.
Nine months ago, legendary fund manager Terry Smith dumped every last share of Diageo from his colossal £22.5bn Fundsmith Equity fund. Diageo, of course, is the global drinks powerhouse behind Guinness, Smirnoff, Johnnie Walker, Baileys, and Captain Morgan. They’re also responsible for 73% of regrettable text messages I’ve ever sent.
Now, Terry’s thesis is that GLP-1s are going to decimate the alcohol industry. I think he’s directionally correct, but overshot how severe the threat really is.
Let me explain why.
The Power Law Problem
Most alcohol sales aren't evenly spread across the drinking population, instead, they're highly concentrated among a small group of heavy drinkers. This pattern, where a minority of customers accounts for the majority of consumption is a classic example of what’s known as the "power law”.
If we take a look at the U.S., around 10% of adults (roughly 24 million) account for 50% of all alcohol sold. To put this into perspective, that's around 74 drinks per week, or 10-11 drinks per day.
Some quick napkin maths show us that if each drink contains about 14 grams of pure alcohol, and alcohol packs roughly 7 calories per gram, these drinkers are consuming roughly 1,000 extra calories daily, about the caloric equivalent of 14 Big Macs a week.
We also see the same pattern in the UK, with the heaviest-drinking 10% of adults responsible for roughly 40% of all alcohol consumed nationwide.
If we zoom out a bit, the top 20% of drinkers account for nearly 70% of total alcohol consumption.
Now, we don't know exactly how much overlap exists between heavy drinkers and GLP-1 users, but given that this group consumes thousands of extra liquid calories per week, I think it's reasonable to assume high rates of overweight and obesity in this group.
But let's try a conservative scenario here.
Let’s say one-tenth of these heavy drinkers across the US and UK decide to hop on GLP-1 treatments, that's about three million of Big Alcohol’s most dedicated customers suddenly reducing their habits.
You don't even need them quitting entirely; if this group just trims back from, say, ten drinks a day to seven or eight, that's a massive chunk of industry sales vanishing overnight.
Even a small behavioral shift in this ultra-critical segment can hit revenues hard and fast thanks to the power law.
What We Actually Know
I’ve written before about how GLP-1s appear to dial down reward-seeking impulses that may affect people suffering with alcohol use disorder. But the obvious follow-up question is: by how much, and in whom?
Right now, there are two studies that can shed some light on this:
Controlled lab trial (JAMA Psychiatry, 2025) → Researchers gave weekly semaglutide injections to 48 adults diagnosed with Alcohol Use Disorder (AUD), meaning they drank at least 7 drinks per week (women) or 14 drinks per week (men), and had at least two heavy-drinking episodes per month (4+ drinks per sitting for women, 5+ for men). Even at a relatively low dose (0.5 mg), they reduced their daily drinking by 41% and reported significantly lower cravings.
Real-world evidence (Nature, 2023) → A survey of 153 adults with obesity who were already taking semaglutide or tirzepatide found they reported a 73% reduction in weekly alcohol consumption, and their likelihood of binge-drinking dropped by about 80% compared to similar people not on medication.
These are promising studies, but there's an important detail to keep in mind.
Both trials looked at problem drinkers below the extreme tail, not the 74-drink-a-week crowd that's keeping the alcohols industries lights on.
This means Terry has basically bet billions on an assumption we can't verify yet. At such high levels of drinking, the biology behind cravings and consumption could be completely different and I think it's entirely possible the drugs won't pack the same punch once you get into that ‘extreme’ territory.
More importantly, these studies assume people stay on the medications consistently, which brings me to what Terry Smith missed.
A Blind Spot
These reductions only matter if people actually stay on the drugs.
Unfortunately, when it comes to medication adherence, heavy drinkers have a pretty dismal track record. The large-scale COMBINE trial found that 37% of patients with alcohol use disorder stopped taking their prescribed meds within the first year.
On top of this, adherence to GLP-1 treatments isn't exactly promising, either.
Recent real-world data from a three-year analysis by Prime Therapeutics show that only 37% of people using GLP-1 drugs for obesity remain on them longer than one year, with adherence plunging to just 8% by year three.
You might expect GLP-1 users to gradually fade out, drifting off the meds all together. But the real-world data tells a different, far more interesting story.
The Cycling Reality
A fascinating five-year analysis by Optum tracked prescription patterns for 135,089 GLP-1 users, uncovering a clear seasonal rhythm to the medication's popularity.
During the cooler half of the year (September–February), new patients initiated on GLP-1s jumped by 18% and refill volumes spiked by an impressive 38%.
Meanwhile, usage fell considerably during the warmer months.
I think this is pretty similar to how gym memberships spike and kale smoothies briefly skyrocket in January. GLP-1 prescriptions probably ride that same motivational wave until the summer hits and the disciplines wanes with bbq’s and alcohol, etc.
If this seasonal medication pattern applies to even a fraction of the heavy-drinking population, the business implications quickly become enormous.
For example, if just 10% of the approximately three million heaviest drinkers in the U.S. and UK adopt GLP-1 treatments seasonally, and if, while on medication, their alcohol intake drops by around 40% (if the JAMA study is generalizable to a large scale) this could erase billions of pounds and dollars from industry revenues each year, only for much of that demand to rebound sharply when these drinkers cycle off.
Such a large-scale seasonal cycling would create intense volatility in alcohol sales volumes, especially since GLP-1 usage perfectly amplifies alcohol's seasonal swings.
So, I think the main threat to alcohol companies may not be a smooth, permanent decline in demand.
Instead, the challenge is much more likely to be managing the turmoil created by seasonal cycles of binge-and-abstain behaviour influenced by intermittent GLP-1 use. That volatility would complicate demand forecasting and strategic planning even more than a gradual, predictable decline.
The Real Threat
Smith deserves credit for accurately spotting the disruption potential of GLP-1 on the alcohol market, but he fell into the trap investors often fall into of veiwing human behaviour as predictable and linear, when in reality it's anything but.
People don’t neatly shift their consumption habits in one smooth motion, they start, stop, ramp up, cut back, and cycle through habits depending on seasons, moods, and social factors. GLP-1 won’t cause drinking to gently slope downward, rather, it'll spark waves of volatility, with sharp drops in consumption followed by quick rebounds.
Was Smith right to completely bail on Diageo solely due to GLP-1s? Right now, that looks premature.
Alcohol businesses have weathered storms before and always found ways to adjust course. From my readings of history betting against booze means betting against humanity’s age-old impulse to chase pleasure, and history hasn’t been kind to those who underestimate that.