What Will the Next GMO-Free Cereal Be?

Original Cheerios will not be the only cereal touting the GMO-free label for very long. Which cereal brands are likely to follow their lead?

Jan 12, 2014 at 2:42PM

In the start of what may be a growing trend among food manufacturers, General Mills (NYSE:GIS) announced that Original Cheerios will be produced GMO-free. While the actual amount of genetically modified seed used in the manufacture of Original Cheerios is small, the results of the move could be broad-reaching if other food manufacturers follow General Mills' move with efforts to remove GMOs from their own products.

There are some clear obstacles that will slow any massive GMO-free movement from occurring in the next year, but there are nonetheless other cereals produced by General Mills and its competitors like Kellogg (NYSE:K) and PepsiCo (NYSE:PEP), which make for strong candidates to undergo reformulations that enable the GMO-free label.

Why GMO-free may not catch on quickly
Regardless of the consumer demand for organic and GMO-free food products, major food producers are limited by simple supply chain logistics that make the sourcing of substantial non-GMO ingredients both difficult and costly. The amount of GMO-based products in Original Cheerios is limited to just small amounts of corn starch and sugar, whereas other cereals even under the Cheerios brand would make the necessary large-scale ingredient sourcing difficult.

That said, there is a significantly longer list of cereals unlikely to go GMO-free than there are cereals able to make the transition. In general, cereals falling under general classifications as sugary, corn-based, or soy-based will have a more difficult transition to GMO-free, and thus are not likely among the next products to be labeled as such. Even Kellogg's Kashi brand cereals, which tout a reputation for being 'natural,' will struggle through a long transition period to become certified as GMO-free. According to Kellogg:

By the end of 2014, all existing Kashi® GOLEAN® cereals and Kashi® Chewy Granola Bars—representing Kashi's biggest offerings—will be Non-GMO Project Verified. Beginning in 2015, all new Kashifoods introduced into the market will contain at least 70 percent organic ingredients and will also be Non-GMO Project Verified. 

Kashi consumers are much more likely to push for the switch to GMO-free products than consumers feasting on cereals represented by cartoon mascots, making Froot Loops and PepsiCo's Cap'n'Crunch unlikely to go GMO-free for reasons beyond just ingredient sourcing.

Who can make the transition?
Conversely, low-sugar and oat-, wheat-, rice- and barley-based cereals would have easier transitions in going GMO-free (though GMO wheat, rice, and barley are under development).

My (somewhat lame) prediction of the next cereal to be labeled as GMO-free will likely be PepsiCo's Quaker Oats. The transition should be nearly seamless, as the product already contains 100% oats, which are already GMO-free, making the transition a marketing issue rather than a recipe issue. The one obstacle that may impede the labeling of GMO-free oats is the fear that it will draw more attention to the vast majority of the company's other product offerings that do contain GMOs.

Following the same line of logic, don't be surprised if Post (NYSE:POST) Grape-Nuts soon carry the GMO-free label. They are currently marketing Vintage Grape-Nuts which do not contain the likely GMO-laden isolated soy protein that is found in their current formulation of the cereal. Presumably with a little consumer demand, the transition back to the original recipe would be easy and enable the GMO-free label.

Original Cheerios was the only one of the top 10 best-selling cereal brands that could easily make the transition, as the remaining cereals on the list are heavily sugared products that often have a corn-base. The one remaining exception that could feasibly make the switch given a little more transition time is Kellogg's Special K brand. Special K cereals are mostly rice- and wheat-based. Though when compared with Original Cheerios, original Special K contains roughly four times more sugar, the resourcing to non-GMO cane sugar is still feasible. Furthermore, the switch to GMO-free matches the already established health-emphasized marketing of Special K brands.

The takeaway
General Mills made a small reformulation to Original Cheerios that may serve as the catalyst for other food manufacturers to reformulate their own cereals in order to achieve a GMO-free label. If consumers respond to these switches with their wallets instead of just their words, expect the trend to grow more rapidly and possibly even facilitate enough of a backing for the mandatory labeling of GMOs in all food products.

Fool contributor Shamus Funk has no position in any stocks mentioned. The Motley Fool recommends PepsiCo. The Motley Fool owns shares of PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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