Tag: forecasting demand

OM in the News: Weight-Loss Drugs Crush Food Demand as Farmers Face Dumping Mountains of Potatoes

The rising popularity of weight-loss drugs like Ozempic, Wegovy, and Zepbound (GLP-1 agonists) is significantly impacting the food industry, resulting in reduced food demand, changes in consumer purchasing habits, and potential surpluses for agricultural producers, according to Fox News (April 1, 2026).

 

Impact on Food Demand and Consumption

  • Reduced Overall Demand: Users of weight-loss drugs often eat less and report a decreased appetite, with some users consuming up to 50% less than before taking the medications.
  • Andy Goodacre has about 1.3 million pounds of top-quality potatoes at risk of going to waste because of changing diet habits

    Surplus Agricultural Products: Farmers, particularly in the United Kingdom, are facing challenges with rising surpluses of traditional staples, such as potatoes, as consumer demand declines.

  • Shifting Restaurant Trends: Restaurant owners report that customers are ordering fewer items, selecting lighter options, and often not finishing their meals, leading to a decline in overall food sales at restaurants.
  • Impact on Packaged Goods: Food companies, including snack manufacturers, are evaluating the long-term impacts of these drugs on consumer purchasing behavior for high-sugar or less-healthy items.
Changes in Eating Habits and Nutrition
  • Reduced “Food Noise”: Users report decreased cravings for alcohol, salty snacks, and high-fat foods, which is reshaping American tastes and reducing demand for ultra-processed foods.
  • Focus on Healthier Options: Many users are pivoting towards healthier, lower-calorie options, and in some cases, increasing their intake of protein to combat muscle loss.
  • Concerns About Malnutrition: Some researchers are flagging potential risks of malnutrition and micronutrient deficiencies, as reduced food intake can limit the intake of necessary nutrients.
Future Projections
  • Long-Term Industry Shift: By 2035, it is projected that 9% of the U.S. population may be on weight-loss drugs, which could lead to a sustained, significant reduction in the consumption of soft drinks, alcohol, and snacks.
  • Adapting the Food Sector: The food industry is beginning to adapt by considering adjustments in portion sizes and developing products that align with the dietary needs of GLP-1 users.

    Classroom discussion questions:

  • 1. What forecasting approaches do the farmers and restaurants need to consider?
  • 2. How should a firm like Frito-Lay address this issue?

Guest Post: The Orange Juice Supply Chain

Prof. Howard Weiss, creator of our free software packages, Excel OM and POM, shares his concerns as a part-time Floridian.

In simplest form, the OJ supply chain is very straightforward. It begins with planting orange trees, harvesting the oranges, preparing the oranges for processing, juicing the oranges, packing the orange juice, shipping the orange juice to distribution centers, storing the orange juice and then shipping the juice to retail outlets. The figure below is very similar to the supply chain illustrated in Figure 1.2 of your textbook.

There are, of course, additional aspects to the supply chain. For example, planting and maintaining trees involves supplying fertilizer and water. Packing the OJ requires the manufacturing of containers and, of course, shipping requires trucks, trains, ships and planes.

Supply Chain Risks: It is well-known that orange trees need to be protected from freezing temperatures and that Florida hurricanes can damage crops. There are other difficult problems facing OJ providers. One is the citrus greening disease. This disease causes the fruits to become inedible and eventually the tree dies. In addition, since many farmers have sold their farms to developers, production of oranges in Florida have dropped to just 8% of what production was 20 years ago! Tropicana now uses oranges grown in Brazil, which is the largest producer of oranges.

Your textbook (see Ch.11) notes that environment and natural catastrophes, such as the disease, can affect supply chain risk and suggests using multiple suppliers or alternative sourcing to offset the risk. This is precisely what OJ producers have done by using oranges from other countries, most notably Brazil and Mexico, which crops have not suffered as much damage due to disease as in Florida. In addition, OJ producers have created new products that mix oranges with other fruits such as apples and pears to offset the loss of oranges.

Declining Demand: OJ manufacturers are also facing a decline in demand due to increased prices to consumers, and consumers questioning the nutritional value of orange juice especially considering the large amount of sugar in OJ. Orange juice demand has dropped while sales of teas, coffees, seltzers, energy drinks and bottled water have increased. Consumption is expected to continue to decrease over the next 5 years.

Classroom discussion questions:
1. Over the past 10 years OJ consumption in thousands of metric tons has been 733, 700, 663, 631, 581, 572, 530, 556, 542, 527. Forecast consumption for the next 5 years.
2. At what stage of its life cycle (see Figure 2.5) is orange juice?