Natural-foods makers have spent years going after the industry establishment. Now, they are taking on each other.
Surging sales of foods marketed as made without genetically modified crops are outpacing sales of food labeled organic in U.S. grocery stores. That is frustrating some organic companies and farmers, who invest significant sums to meet government organic standards and to get their foods certified.
The organic industry is responding with marketing campaigns touting that its foods—in addition to being made without genetically modified organisms, or GMOs, as such crops are known—also abide by other requirements.
For example, the U.S. Department of Agriculture, which has certified organic foods since 2002, requires that producers also keep out most synthetic pesticides and certain fertilizers, and that animals used to produce organic food can go outdoors year-round and aren’t given hormones or antibiotics.
“Organic is non-GMO,” said Cathy Calfo, executive director of California Certified Organic Farmers, a trade group that recently started promoting a new label to highlight the difference. “Non-GMO is not organic.”
The federal government doesn’t regulate non-GMO labeling. Instead, certification is done by private groups, mainly the Non-GMO Project. The Bellingham, Wash., nonprofit doesn’t prohibit the use of synthetic pesticides on crops used as ingredients, or ensure animal-welfare standards. But it says it tests more stringently to ensure GMOs aren’t inadvertently mixed into ingredients during transportation or production.
The distinctions might seem like hairsplitting, but they matter for companies. Earning the Non-GMO Project’s imprimatur or the USDA’s organic certification can take months or years, depending on the item and the applicant backlog. Each can cost thousands of dollars initially, and must be renewed annually—a significant expense for smaller producers. Prices for organic and non-GMO ingredients also are significantly higher than regular ones.
GMOs have become a focus of skeptical consumers. U.S. government agencies and international bodies including the World Health Organization long have said that GMOs—whose DNA is altered to withstand pests or weedkilling sprays—are safe. But the technology’s critics say it facilitates harmful use of pesticides and that GMOs’ safety for human consumption isn’t proven.
That doubt has driven rapid growth for non-GMO foods, which this year are on pace to surpass those of food bearing the USDA’s certified organic seal, according to data compiled by research company Spins LLC.
Non-GMO sales soared by an average of about 70% annually from 2013 through this year, and are expected to top $13 billion this year. That is five times the rate for food tracked by Spins that bears the organic seal, sales of which total nearly $11 billion for the 52 weeks ended Nov 1. The Spins data don’t include sales from Whole Foods Market Inc., a major seller of both categories.
The USDA’s organic certification applies to foods that are 95% or more organic. The Organic Trade Association, whose numbers include estimates of Whole Foods sales and some other retailers not measured by Spins, touts the much larger figure of $35.9 billion in 2014 for foods containing 70% or more organic ingredients.
One category’s growth can come at the expense of another’s, since specialty foods often compete for the same limited shelf space in supermarkets. Last year, foods labeled non-GMO claimed 3.7% of total food sales in U.S. grocery stores, more than the 3.5% for organic items, according to market-research firm Nielsen NV. About 49% of consumers polled by Nielsen called non-GMO an important factor in food-and-beverage shopping, versus 47% for organic.
Organic-food companies say many consumers are confused about the labels’ different attributes. Vernon Peterson, owner of Abundant Harvest Organics in Kingsburg, Calif., says he often receives inquiries about the peaches, persimmons and other crops that his company distributes to customers including Kroger Co. and Whole Foods.