Food & Drink

Can GMO-Free Cheerios Fix Cereal's Soggy Sales?


Original Cheerios breakfast cereal in the U.S. will no longer contain genetically modified ingredients, in a change by General Mills’ (GIS) that not only adds a hefty new competitor to one of the country’s bestselling brands, but the cereal market is shrinking. In the year ended Nov. 3, dollar sales of cereal had dropped 2.5 percent from the previous year, and sales of Cheerios sagged about 7 percent, according to data from market research firm IRI.

There’s no assurance that removing genetically modified ingredients will reverse this slump. While General Mills has been able to increase sales of Chex by marketing the cereal as gluten-free, the Cheerios change will serve as a test of another way to boost the cereal business. The label will now read, “not made with genetically modified ingredients.” The good news for consumers trying to avoid GMOs without breaking the bank on organics is that the retail price won’t go up. The bad news for Honey Nut fans is the change applies only to original Cheerios.

Cheerios in Europe is already GMO-free, and last year a consumer advocacy group criticized the company for not offering consumers in the U.S. the same product. General Mills did not comment on the issue at the time but was already months deep in planning the switch in the U.S. (The company denies that the change is a response to consumer pressure.)

“It was the unique and simple nature of original Cheerios that allowed this,” says General Mills spokesman Mike Siemienas. Consider the short ingredient list: whole grain oats, corn starch, sugar, salt, tripotassium phosphate, wheat starch, and vitamins and minerals. The main switches were to non-GM cornstarch and non-GM cane sugar from beet sugar. “Original Cheerios has always been made with whole grain oats, and there are no GMO oats,” a blog post on the company’s website explains.

“For other cereals, the widespread use of GM seed for corn, soy, and beet sugar make moving to non-GMO ingredients difficult, if not impossible,” says Siemienas. About 60 percent to 70 percent of foods on grocery shelves now contain GMOs, and corn, sugar beets, soybeans, canola, and cottonseed are among the most common GMO ingredients.

Siemienas would not comment on the cost of GMO-free ingredients for Cheerios but told the Wall Street Journal that finding new sources of cornstarch and sugar “required significant investment.” Reversing the sales decline would make it well worth the effort.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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Companies Mentioned

  • GIS
    (General Mills Inc)
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