The industry is exploring how organic and non-GMO products are impacting sales for major manufacturers, particularly those that produce processed foods. Announcements from major manufacturers like McCormick, which has committed to transitioning 80% of its products to organic and non-GMO by 2016, and Campbell, which will begin labeling GMO ingredients and already offers organic products, have turned the spotlight back on what organic and non-GMO products mean for bigger food and beverage companies.
But how do the sales of organic and non-GMO foods impact each other? Do they grow in tandem, or does the growth of one segment stifle the growth of the other? Knowing these answers could help manufacturers decide whether they want to pursue producing organic products, non-GMO products, or neither.
Non-GMO label: A 'threat' or complement to organic?
Producers have found the non-GMO label to be problematic for the sales of organic foods.
"The non-GMO label threatens the USDA Organic label," Greg Lickteig, director of The Scoular Company, seller of both organic and non-GMO grains, told Organic Connections Magazine. "Given two products on the grocery store shelf, one being non-GMO and the other organic, the non-GMO product will most certainly be less expensive."
Sales numbers support this concern. According to data from research company Spins LLC, non-GMO sales have increased by an average of about 70% each year from 2013 to 2015, five times the rate for tracked organic foods, The Wall Street Journal reported. However, this data does not include sales from Whole Foods Market, a well-known purveyor of both non-GMO and organic products.
As for total sales, the Organic Trade Association reported $39.1 billion in annual organic product sales in 2014, while Packaged Facts found non-GMO foods and beverages generated $200 billion in sales for 2014.
But not all in the food and beverage industries agree with this sentiment.
"I don't see it so much as competition as expressions of the same trend, and that ultimately will benefit each other," said Carl Jorgensen, director of global consumer strategy of wellness at global retail strategy company Daymon Worldwide.
What's in a label? Clearing up the confusion
The growth of the non-GMO and organic industries have been in tandem as consumers become more concerned with where their foods come from and whether those products are "healthy" and "natural."
The biggest misconception involves whether non-GMO and organic are the same.
"Organic is non-GMO," Cathy Calfo, executive director of California Certified Organic Farmers (CCOF), told The Wall Street Journal. "Non-GMO is not organic."
To be certified as organic by the USDA, a food or beverage must not be made with genetically modified ingredients, but it must also meet other requirements. The CCOF debuted a new seal for organic producers, "Non-GMO & More," to explain this to consumers. Non-GMO labeling is regulated by third parties like the Non-GMO Project and NSF International.
"More communications can be designed around educating consumers on the non-GMO status of organic," said Jorgensen. "… [Consumers will] see that not only is organic non-GMO, but it has all these other qualities that a strictly non-GMO only product would not have."
There are cases where food companies will not only invest in pursuing an organic label but will double their efforts to secure a non-GMO label too, even though organic products are by definition already non-GMO.
"While the organic program absolutely does have regulations prohibiting the use of GMOs, only the Non-GMO Project requires comprehensive ongoing testing," said Courtney Pineau, associate director of the Non-GMO Project. "Therefore, many brands with organic products seek the Non-GMO Project Verified seal in addition to the organic label to demonstrate their commitment to the most rigorous GMO avoidance measures possible."
So why the two labels? It all comes down to manufacturers wanting to clear up confusion, educate consumers, and respond to consumer trends. If consumers don’t realize that organic means a product is already non-GMO, the manufacturer may choose to use both seals as a clearer marketing strategy.
How consumer trends and education contribute to growth of non-GMO and organic
Transparency and clean labels are the two major trends impacting the growth of the non-GMO and organic industries, Jorgensen said.
Manufacturers have responded by removing artificial ingredients, trans fats, high fructose corn syrup, and other ingredients considered undesirable by the growing health-conscious consumer demographic.
Also, companies are including health claims, including organic and non-GMO seals, on their product labels to better inform consumers and keep up with trends. Jorgensen said that the best place to educate consumers about non-GMO and organic foods is right on the product label. That means clearly identifying whether a product is non-GMO or organic, but it also means better explaining what those distinctions mean.
"If you're a marketer for organic products, the more information you can provide to your customers, the better it is for you," said Jorgensen. "There's an old saying in marketing, the educated customer is the best customer."
"Rather than unsubstantiated marketing claims, [consumers] seek third-party certifications they can trust," said Pineau.
Manufacturers are banking that consumers will respond positively to organic and non-GMO labels. PepsiCo, for example, recently announced that some Tropicana products would soon bear a non-GMO label. This has caused some controversy, because the likelihood of genetically modified oranges coming to breakfast tables could be some 30 years away, so the company didn't have to reformulate the products to qualify for the label.
Public health advocates find this misleading, but manufacturers can promote their products as non-GMO, organic, gluten-free, allergen-free, etc. when the products do meet those requirements. The product may never have contained GMOs or gluten to begin with, and therefore didn’t need to be reformulated to bear the label or seal, but that label can be reassuring to consumers.
Non-GMO and organic producers are generally working toward the same future — one with greater transparency and clean labels that inform consumers about the foods and beverages they want to buy.
The continued growth of both categories is assured, especially as more major manufacturers jump onboard (Think: General Mills’ Non-GMO Cheerios and Kellogg’s Kashi brand). But whether manufacturers choose to invest in obtaining a non-GMO seal, organic seal, or both, may ultimately come down to the potential sales numbers, particularly when cost and price come into play.