Cargill’s Commitment Shows the Scope of Non-GMO

November 17th, 2016

The debate about genetically modified organisms (GMO) divides the food industry like nothing else. Global value sales of food and beverage products with GMO-free labelling were upwards of USD17 billion in 2015. Cargill, traditionally a proponent of the use of biotechnology in food, recently announced production of three ingredients with verification from the Non-GMO Project, enabling products using the ingredients to carry the voluntary organisation’s signature butterfly logo. Cargill’s embracing of the non-GMO movement is limited at present and relatively insignificant in itself. However, the ingredient giant clearly recognises a growing demand for ingredients created without bioengineering. Ultimately, this could signify a shift in attitude for the industry as a whole, and precede a point where non-GMO, like various other clean label claims, becomes a prerequisite for many products.

An easy decision for Cargill

The three Cargill ingredients that will have Non-GMO Project accreditation are erythritol, cane sugar and high oleic sunflower oil. Erythritol, a bulk sweetener derived from corn, posted a strong global CAGR of 20% between 2010 and 2015, likely helped by the fact it can be combined with the natural sweetener stevia. The same consumers who demand natural sweeteners could well also want non-GMO ingredients, so Cargill’s move makes sense. Unlike erythritol, neither cane sugar nor high oleic sunflower oil are produced using genetic modification, so the requirement for non-GMO verification is less clear. However, for consumers wary of GM ingredients, this is unlikely to matter and the move will enable Cargill to target the huge consumption of sucrose and vegetable oil, both comfortably over 45 million tonnes globally. Moreover, with consumer suspicion of GMOs rising, the move allows Cargill to subtly alter its image, whilst still providing genetically modified alternatives.

Ingredients industry on top of non-GMO

Cargill is far from the first major ingredients business to look to GMO, with Bunge, Ingredion and Kerry also producing Non-GMO Project verified ingredients. ADM’s recent development of a new flaxseed oil for adding omega-3 to food also notably emphasised the non-GMO nature of the oil. The reasons will vary from company to company, with some responding to consumer pressure or moves by competitors and others eyeing up the higher profit margins provided by non-GMO ingredients. All of this serves to underline that, while Cargill’s decision to go non-GMO is important, given its advocacy of GM ingredients in the past, it is just the latest indication that the ingredients industry as a whole is waking up to the importance of non-GMO.

A surge in non-GMO products?

If the ingredients industry is moving towards non-GMO, this represents a game-changer for packaged food and beverages. The backing of large companies like Cargill means the number and variety of non-GMO ingredients will grow, with more secure supply chains. More suppliers should also lead to increased affordability for non-GM ingredients. If consumers begin to look for products that emphasise a lack of GMOs, it is not too difficult to envisage a scenario in which major packaged food manufacturers begin modifying their products, both to attract consumers and respond to prior competitor changes. The power of this snowball effect has been well illustrated by the rise of the clean label movement. Pan-category players like Campbell Soup, General Mills and Kellogg have already agreed to declare the use of GM ingredients on their brand packaging where necessary. If consumers move away from these brands as a result, the owners will have to respond and the increased availability of non-GM ingredients will make this easier.

Cargill’s choice to invest in non-GM appears to mirror a collective change in the mindset of the ingredients industry and, given the company’s status as a backer of GM, could influence the decision-making of other businesses. While this does not guarantee changes at product level, a switch to non-GM will become more appealing, as players look for a way to differentiate their brands from their competitors’. The pressure of growing consumer awareness could also tell and it could be this which companies like Cargill are banking on.

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John George

John George is an analyst in the ingredients industry at Euromonitor International. He is responsible for publishing research relating to the global ingredients industry as well as providing analysis on market trends and ingredient innovation. John has a degree in Biomedical Science (BSc with honours) from The University of Warwick.

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