Non-GMO Demand Soars Despite Lack of Consumer Understanding
Recent years have seen steadily rising demand for products without genetically modified organisms (GMOs). Sales of food labeled “non-GMO” grew more than $8 billion between 2012 and mid-2016, reaching $21.1 billion, according to supermarket scan data from Schaumburg, Ill.-based research firm Nielsen.
But what’s driving such dramatic growth? Carl Jorgensen, director, global thought leadership with Stamford, Conn.-based Daymon Worldwide, says the cause is simple: GMOs are a “stand-in” for Big Government, Big Agriculture and Big Food. And consumer distrust of these three institutions is skyrocketing.
“Consumers may not understand exactly what GMOs are,” he notes, “but they have an instinctive aversion to the idea of genetically engineered food.”
In fact, consumers are losing trust even in the face of expert opinions on the matter. According to a 2015 Pew Research Center study, 57 percent of U.S. consumers consider eating genetically modified foods “generally unsafe,” even though only 11 percent of scientists with the American Association for the Advancement of Science feel the same. Additionally, a February 2016 report from Rockville, Md.-based market researcher Packaged Facts found that 26 percent of U.S. adults believe that non-GMO labeling is an especially important factor when choosing what foods to eat.
“Consumers want their foods to be more natural,” Jorgensen adds, “and GMOs are seen as not natural.”
Further, while no one really knows the effects of altering the DNA of organisms in food products, cancer incidence is on the rise, along with many food sensitivities and allergies, all of which are arousing suspicion.
“Only 20 percent of diagnosed cancers have known origins, and food allergies are growing at lighting speed, which leads one to think that maybe what we are altering in our food may be altering our health,” says Mary Vandewiele, co-owner of The Better Health Markets, in Novi, Mich.
Of all generations, Millennials are leading the demand for labels calling out GMOs. So whether GMOs are actually harmful, Millennials’ growing purchasing power means money does — and will continue to do — the talking here.
“The Millennials were the first generation to grow up with [the] awareness and knowledge [of GMOs], and will be leading the charge on cleaner products,” Vandewiele explains. “This will invariably put more pressure on companies to add more information to their labels or lose traction in the market.”
Retailers, Manufacturers Respond
Lou Biscotti, partner with Chicago-based research firm WeiserMazars and leader of its food and beverage national practice, has seen demand for such information grow. In the same way that retailers such as Austin, Texas-based Whole Foods Market and Monrovia, Calif.-based Trader Joe’s have focused marketing efforts on their extensive organic offerings, many retailers today are pushing suppliers for non-GMO products, understanding their profitability.
Whole Foods, for instance, found in 2015 that the 130 brands that actively supported California’s and Washington state’s GMO labeling initiatives collectively saw sales rise almost 13 percent, Jorgensen notes. Meanwhile, brands that opposed the labeling were down almost 10 percent in sales. Overall, sales of Non-GMO Project Verified products were up 21 percent for more than 7,000 items, and sales of products that were both organic and Non-GMO Project Verified were up 17 percent.
True, Whole Foods customers are more likely than those at more traditional retailers to consciously avoid GMOs. However, this data reflects mainstream retailers’ sales data and not Whole Foods’, as the grocer didn’t share scan data with Nielsen over that time period.
“Just as the organic label became increasingly important to retailers and consumers in recent years, we’re now beginning to see a similar demand for the non-GMO label, one that is only likely to increase over the next year,” Biscotti explains.
The Better Health Market has, for the past few years, been making such a push. The retailer actively educates its customers and sends a message to its business partners that its philosophy is to embrace foods that are natural, organic and minimally processed to promote better health and prevent disease. Natural and organic labels are cleaner than conventional ones, and with the passage of the Safe and Accurate Food Labeling Act of 2015 — called by some GMO labeling advocates “the DARK (Denying Americans the Right to Know) Act” — no one can be certain that the foods they put in their carts don’t contain GMOs. Therefore, labeling is critical for the retailer and its customers.
“We give higher consideration to potential new products that have the non-GMO label present on the package,” Vandewiele asserts. “In response, we see more and more products now have this certification. Suppliers understand that this gives them easier entry as a new product.”
Other grocers aren’t having to nudge their business partners as much. Heather Isely, EVP of Lakewood, Colo.-based Natural Grocers, says her company hasn’t had to pressure vendors because they’re responding directly to consumer demand for transparency and higher quality in their foods. For instance, all of the retailer’s produce is 100 percent USDA Certified Organic, which requires it to be non-GMO.
“Because we offer a large assortment of organic food options in our stores, we are able to significantly reduce the percentage of GMO-containing foods when compared to traditional grocery retailers,” she says.
However, traditional grocers have been cautious when it comes to educating about GMOs and non-GMO products via in-store merchandising, Jorgensen notes. Instead, they’ve been happy to let individual brands make their own non-GMO claims on packaging, and some retailers — as the Cincinnati-based Kroger Co. is doing with its Simple Truth brand — are experimenting with non-GMO labels on their store-brand products.
Labeling for GMOs
As for labeling that communicates that a product does contain GMOs, the Roberts-Stabenow Biotech Labeling Act, which President Obama recently signed into law, will require most food products to carry a text label, symbol or QR code indicating whether they contain GMOs. Originally proposed by Sens. Debbie Stabenow (D-Mich.) and Pat Roberts (R-Kan.), members of the Senate Committee on Agriculture, Nutrition and Forestry, the new law nullifies Vermont’s own recently passed GMO-labeling law by closing what the federal legislators called “glaring loopholes” in the Vermont law. Manufacturers will have two years before they have to adopt the labeling, as the rules behind the law still must be written.
Many industry associations praised the speedy signing of the bill into a law, including Food Marketing Institute, the Grocery Manufacturers Association and the National Grocers Association. Additionally, for the most part, many manufacturers and retailers have already been moving toward the labeling now being formalized by the legislation. One major reason for the praise is the fact that the bill will keep food manufacturers from having to navigate a plethora of varying state laws, which would force a choice between tailoring labels by state — a pricey proposition — or pulling products altogether from retailers in that state.
However, the legislation situation has been in such a state of flux that it’s difficult to assess how retailers’ relationships with suppliers are being affected, Jorgensen notes. In general, retailers haven’t seen any problems with sales of products labeled as containing GMOs, such as those from Campbell’s and Mars. In fact, a study released by the University of Vermont in late 2015 found that, contrary to the arguments of labeling opponents, GMO labeling wouldn’t act as warnings that scare consumers away from buying products with GMOs.
“I would say that from a retailer perspective, there is nothing to fear from GMO labels, and every reason to encourage non-GMO labels for the sales lift they provide,” Jorgensen says.
It would be ironic if the pending law stimulated the non-GMO market even further, he adds. Because it allows for “considerable lack of transparency” in the labeling, the level of consumer trust could be exacerbated, further burnishing the natural halo of non-GMO products.
But the more demand grows for non-GMO products, the more potential for trouble exists down the line. A major issue that retailers and manufacturers must worry about is maintaining steady supply, as agriculture hasn’t kept up with demand for non-GMO products, meaning that manufacturers must take extra precautions to source and secure reliable quantities of non-GMO ingredients. Strategies include long-term contracts and dealing with specialty identity-preserved grain dealers.
Ultimately, the trend of non-GMO products is here to stay. Whether we’ll continue to see non-GMO claims on more products, however, won’t depend solely on consumer demand — it also will depend on how confident manufacturers are that they’ll have access to a steady supply of non-GMO ingredients.