Healthy food transitions: Product-line design under consumer self-control heterogeneity

This study investigates a food manufacturer’s optimal product-line design in a health-oriented supply chain characterized by consumer self-control heterogeneity and stochastic demand. Utilizing a newsvendor analytical framework, we examine the manufacturer’s choice among Pure-Healthy, Pure-Unhealthy, and Dual-Product strategies, where low self-control consumers prioritize hedonic attributes and high self-control consumers balance health and indulgence. Our results characterize the optimal product-line strategy regions and identify the Dual-Product strategy as a critical mechanism for retaining demand that internalizes heterogeneous consumer switching behavior. We further analyze demand shaping forces such as firm-led marketing and government interventions including sugar taxes and subsidies, finding that while marketing lowers the threshold for adopting healthy products, its profitability is contingent on consumer composition and reputation effects. We demonstrate that policy instruments exert asymmetric operational pressures, with sugar taxes compressing margins and subsidies expanding market reach; however, excessive subsidies may diminish social welfare if fiscal costs exceed demand expansion benefits. Ultimately, this research highlights that fostering a healthier food supply chain requires the coordinated management of consumer behavior and demand, production decisions, product line interactions, and policy intensity.