How Mainstream Food Brands Are Affecting The Availability Of Non-GMO

Posted by Hannah Broaddus

How Mainstream Food Brands Are Affecting The Availability Of Non-GMO IngredientsThe era of Non-GMO is upon us.

No matter how you feel about the non-GMO movement, it's a fact that it's in full swing in the food industry, and it's still picking up speed.  

This movement, still in its adolescence, will come in stages.  It's childhood was the blossoming of demand for non-GMO foods and the establishment of small companies and niche brands that catered to this new trend.  Next comes the transition of large mainstream companies to non-GMO, as they hop on the bandwagon.  In fact, we're just moving into phase two of this movement now.  

This evolution of large companies "hopping on board" has an affect on the entire supply and demand chain for non-GMO ingredients.  If you also buy non-GMO, it will affect how your business gets ingredients, if they're available and what the prices are.  

You'll want to know this, and you'll want to begin preparing now.

How The Non-GMO Movement Was Born

The non-GMO movement started small, just like the organic movement.  It started on family farms, around homemade dinners and in conversations between mothers.

As demand for this type food increased, healthy brands already in existance began to market that they were non-GMO.  Small new brands blossomed with healthy and interesting new products to fill this growing niche.  Legislation ideas began to form and a plan came to life.  Then the Non-GMO Project Verification happened.

How The Non-GMO Movement Grew

How The Non-GMO Movement Grew for Bulk Oil IngredientsThe Non-GMO Project Verification™ was, in my opinion, the turning point into phase two.  It may have been a slow transition, but their 3rd party verification process set a standard for food companies to reach for.  

No longer were brands simply stating that their products were non-GMO-- they also had an independent verification to back them up.  A special colorful seal, that meant something important to their customers.  Through those same customers, popularity grew for the verification, and demand increased exponentially.

As the Non-GMO Project Verified™ seal became visible on more and more products, other brands started to take notice.  Not just small specialty food brands, but also larger mainstream brands too.  That brings us to today.

Right now, “GMO-free” is now the fastest growing store brand claim¹.  In addition, the Non-GMO Project Verified™ seal is one of the fastest growing seals in the natural products industry, at a rate of more than 15% last year2.

Brands across the US have taken note that having a product that is non-GMO is more marketable, more accepted, and helps them to gain new sales.  Many companies have recently reviewed the idea switching to non-GMO ingredients, or are in the process now.  Even if their the goal for their product is not to become Non-GMO Project Verified™, many companies still see the value of switching.

Being non-GMO is now profitable for business, not just a strongly held foundational belief of a company.

How Mainstream Brands Began Participating in the Non-GMO Movement

Common GMO Crops for Bulk Oil IngredientsAs "non-GMO" became not just a belief, but also a marketing buzzword and a sales adjective, mainstream conventional brands have taken notice.  Some have switched to non-GMO ingredients, like the well known switch that Cheerios made to non-GMO.  

Many large brands are still in the middle of quietly making the transition, as they're trying to source non-GMO ingredients as we speak.  

This transition can take a while, and can pose many challenges for a business.  Particular ingredients like soy, corn and canola are predominantly available as a GMO version.  For example, 90% of the canola grown in North America uses genetic modification, which can be a challenge for sourcing.  

Non-GMO ingredients, when available, are often at higher costs and require a long term investment from each company.  This higher cost means a permanent loss of profit margin, or an increase in their own prices.  At the very least, there are some big strategic business decisions to be made.

The Ag Industry Is Trying To Keep Up

As demand for non-GMO ingredients increase, everyone knows that the ag industry will need to grow more non-GMO crops to keep up demand.  Duh, right?  

Long story short, the ag industry is trying, but the transition takes a while and demand for non-GMO ingredients is increasing faster than they can keep up right now.  

There's challenges on their side too.  Non-GMO crops must be strategically placed away from GMO crops, where cross contamination can happen.  GMO agriculture must go through a process to turn back into Non-GMO.  

And above it all, farmers plant what there is currently demand for, and they only harvest once each year.  That means that the Non-GMO Canola that's being harvested this year was based on demand and projections from many months ago.  We all know, demand has exploded in the last year.  Eventually, they will catch up but there's quite a steep curve to keep up with right now.

A Real-Life Example of How A Large Company Switching To Non-GMO Can Affect Your Ingredient Availability

As mainstream brands switch to non-GMO, you will be affected if you also use those same ingredients in your manufacturing.  There's no way around it, because there's only so much of each type of food.

Let's focus on a good example: Cheerios.

Cheerios switched all of their original cheerios cereal over to being made from only non-GMO ingredients.  They used corn and sugar cane that had to be switched to the non-GMO varieties, in addition to the whole grain oats (which are already non-GMO) that they use.

Now, keep in mind that they have been growing their brand for 73 years-- they aren't using just a little bit of corn and a little bit of sugar cane.  When they switched to the non-GMO varieties of these ingredients, they stopped buying a LOT of GMO corn and a LOT of GMO sugar cane, and started buying a LOT of non-GMO corn and a LOT of non-GMO sugarcane.  

That demand that they put on the non-GMO corn and sugar cane market had an effect.  Suddenly, there was a lot more demand in the market, and the availability of those items to other companies decreased by... well, a LOT-- however much they buy.  

Now multiply that by all of the established, large companies that are switching to a non-GMO variety of your same ingredients, and include all of their large volumes.  Suddently, your ingredient market may be looking really tight!

How Additional Mainstream Demand Affects Your Business

This situation is common, and it is probably happening with one or more of the ingredients that you already buy.  In fact, we're seeing it right now in the Sunflower and Safflower Oil markets.

In theory, if you are buying a Non-GMO ingredient in bulk for your manufacturing, you're always competing with other companies for access to that ingredient.  All foods have a finite supply, however much that may be.

As large food companies strain the availability of certain ingredients to the max, the market tights and competition begins to increase.  For example, if 100 large companies all tried to switch to non-GMO Canola Oil this year, a few things are going to happen, and they're all going to affect your business if you use non-GMO Canola Oil too.

  1. The price is going to go up.
  2. The availability of the oil is going to go down.

How To Cope With A Tight Commodity Market and Strategically Plan Ahead

If mainstream food companies are putting additional stress on the supply chain that you use, here's what you can expect-- and what you can do about it.  The important thing?  Plan ahead, and be strategic.

Expectiation #1: The price is going to go up.

As demand for an item goes up, supply will go down (so says the natural law of supply and demand-- thanks econ 101!).  This, in turn, will cause an increase in price.

All suppliers are familiar with this fact, for better or worse.  The less that is available of a particular type of ingredient, the more its price is going to go up.  If supply increases, the price will go back down.

Here's how you can plan ahead:  Talk to your suppliers, and always ask them why prices are going up.  Does it have to do with a lower production year, a blight or pest infection, poor weather, or an increase in demand?  If it's an increase in demand, find out more.  Information is your friend here.

If it looks like things could take a turn for the worst, start brainstorming ingredient alternatives that you could put into place if necessary.  Talk to your supplier about this idea, and get samples into QA just in case.

Expectation #2: The availability is going to go down.

If demand continues to increase for particular non-GMO raw ingredients, the available supply will begin to dwindle.  For purchasers, it won't just be about the price of the ingredient anymore-- the focus will now be if they can actually get it.  

Sometimes, you won't always know that availability has gone down.  For example, if you are locked into a year contract, you may find at the end of a year that the plentiful supply you've experienced is only because of good planning and contracting on your part.  Again, talk to your suppliers.  Ask them for routine market updates even during the midst of your contract.

Here's how you can plan ahead:  Contract for the oils that you know you'll need.  Keep a few extra suppliers vetted and on hand that can supply the ingredients you use.  Make sure you have a couple option, in case one supplier happens to be out of inventory.

The Key Takeaways

This process of larger mainstream companies "hopping on the bandwagon" (like the non-GMO bandwagon) is a common process as less than conventional ideas take hold, gain popularity and spread.

If you use the same non-gmo ingredients that these companies are newly interested in, you will feel the pressure on your supply chain.  The key to preparing for this will be communication (as always).  

Keep communicating with your suppliers and they will guide you through these situations.

 

Topics: Food Manufacturing, Industry Trends, Non-GMO

 

 

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