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GMO’s: Genetically-Modified Organisations?

The past three months have witnessed a significant increase in content relating to Genetically Modified Organisms (GMOs) in the UK, with major developments being the creation of blight-resistant potatoes, reports that GM fish oil field trials could occur in the coming months and the potential introduction of genetically-modified purple tomatoes.

In parallel to this, the United States has seen a similar trend but on a much greater scale, with well-organised campaigns led by numerous anti-GMO pressure groups including GMO Inside and the Organic Consumer’s Association successfully lobbying companies such as Kellogg’s, Smart Balance and General Mills to remove GMOs from some of their product lines.

With pressure also mounting for US companies to clearly label which products contain GMOs, there is an intriguing choice facing food manufacturers, which may have profound reputational consequences.

The arguments for and against the use of GMOs are well known and essentially pit their reported negative health implications and lower nutrition against their potential to provide an abundant and hardier food supply.  What is interesting to note is the differing regulatory approaches to GMOs in Europe and the United States. In the EU, GMOs are closely regulated with each product containing such substances needing to be individually evaluated and signed off before it can be introduced. In the US, by contrast, GMOs are much more widespread, and they currently account for 75-80% of conventional processed food in the US. Clearly this is a significantly different regulatory backdrop for companies operating in these markets and this provides a crucial difference in shaping ideas of “normality” in both regions as well as informing the reputational agenda.

In the United States, there is a significant reputation opportunity for companies in bucking the trend and declaring themselves to be GMO-free. Not only is there a reduction in risk from pressure groups, but there is a strong positive potential in positioning the company as more “natural” and therefore healthier. Data from Packaged Foods indicates US retail sales of non-GMO foods and beverages are projected to increase at a compound annual growth rate of 12.9% in the next five years, and could represent 30% of the market with a value of $264bn in 2017.

While data from the NPD Group reveals 67% of all primary grocery shoppers are not willing to pay a higher price for non-GMO foods, there remains an opportunity for the premiumisation of non-GMO products in the same way that free range and organic products have successfully created a profitable niche. This would create an increased risk for food producers that do not comply with such standards as unfavourable comparisons would be drawn and public opinion potentially shifts.

However, for companies making the switch to non-GMO, the key reputational risk is in the authenticity of their claims; it is becoming more and more difficult to guarantee that produce is non-GMO given how easily GMOs proliferate, as General Mills and the Food and Agriculture Organization have discovered.

In the EU, where non-GMO is the norm, the situation is different. Starbucks is currently under pressure over its milk stocks but this has not made a significant impact. If the introduction of blight-resistant potatoes represents the beginning of a wave of GMO products in the region, a similar premiumisation effect may occur.

While unlikely, it could be argued that there is an opportunity for a company to seek to differentiate itself through making a virtue out of the use of Genetically Modified Organisms. Many scientists have long expounded the safety of GMOs and the humanitarian benefits they provide have been expressed via initiatives such as the Golden Rice project, but this positioning has never been successfully articulated by a commercial entity. With responsible business practices and a greater focus on sustainability reportedly key requirements of organisations in 2014, could GMOs represent the ultimate sustainable statement?

It would be a brave company that takes this path.

 

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