Weight loss drugs have been in the spotlight. But it’s just one aspect of the growing focus on health — both on the part of consumers and governments. The Covid-19 pandemic was a big factor behind the increased focus on weight and its health effects, 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 increase in the adoption of weight loss drugs, there has also been a strong movement (supported by social media networking) to de-stigmatize obesity and encourage body confidence,” she wrote. Wellness goes beyond weight loss — it also includes fitness, nutrition, appearance, sleep and attention, the bank wrote, citing McKinsey research that showed millennials focus more on these factors. The bank noted that rising health care spending — both in absolute terms and as a percentage of gross domestic product — has increased the focus on implementing policies that address these issues. “Even before GLP-1 hit the headlines, developed market policy was shifting to a more interventionist approach to consumer health,” Morgan Stanley wrote in a Nov. 1 report, referring to glucagon peptide-1 drugs that originally developed for diabetes but also widely used for weight loss. “The cost of treating obesity-related diseases and the loss of worker productivity make continued intervention likely, in our view,” the bank added. Such drugs also affect eating habits: Walmart said last month it’s seeing a “slight shift” in the way people shop for food, which may be in part because customers are buying less while on drugs that suppress them. appetite, such as the diabetes medicines Mounjaro and Wegovy. “While the perception may be that the US has led the way in the adoption of weight loss drugs, Europe has become relatively more interventionist in terms of policy, in the form of increased taxes/restrictions on products deemed unhealthy and strategies designed to push the wider population to better health,” said Morgan Stanley. CNBC Pro takes a look at the stocks Morgan Stanley says will be affected by these trends — both positively and negatively. Beneficiaries Morgan Stanley said “functional” foods, waters, skin care and cosmetics and consumer health should all fare well. The wellness trend should be positive for companies that focus on nutrient-dense foods such as protein powders and other protein-fortified foods such as premium yogurts, the bank said. French food maker Danone is well-positioned for the “global shift to wellness,” the bank said, adding that all three of the company’s divisions could benefit: basic dairy and plant-based products. water products; and specialized nutrition. Morgan Stanley upgraded its rating on Danone to “overweight”. He also reiterated his overweight rating on Glanbia – a major protein powder maker in the United States – as well as Nestle, which he said should be “broadly neutral” in the GLP-1 debate. But the bank said Nestle has the potential to tap into the wellness trend through its nutrition division, which makes 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,” the bank said. “We believe the ‘medicalization’ of skin care will continue, with increased uptake of actives/skin products, including SPF, as the importance of skin health increases,” he added. It cited L’Oreal, Beiersdorf and Intercos as key beneficiaries. “We also note that consumers spending less on groceries will have more disposable income, alleviating near-term concerns some investors have about spending in the more discerning beauty category,” Morgan Stanley said. At risk Alcoholic beverages and soft drinks appear to be among the categories most affected by the GLP-1 trend and the focus on wellness, Morgan Stanley said. This is because medical studies have shown that GLP-1 drugs can be effective in reducing alcohol consumption and relapse behaviors, the bank said. Spirits companies on the list of underrated stocks include Diageo and Remy Cointreau. Beers should be less affected, Morgan Stanley said. “GLP-1 uptake is currently heavily skewed towards women, suggesting that beer consumption, which skews men, should be less affected, at least in the short to medium term.” Brewer Anheuser-Busch Inbev is the best place, he said. In soft drinks, there has been a “significant shift” towards low- or no-calorie drinks, which should “mitigate any potential impact”, the bank said. British soft drinks maker Britvic should be better off than Fever-Tree, which makes mixers and could be affected by weakness in the spirits category. — CNBC’s Michael Bloom contributed to this report.