Written by Matt DiLeo
It’s 3 am local time and I’m wide awake, fixated on the challenge of brand differentiation in ketchup…
I recently spoke with one of the ketchup tomato breeders I know. Among other topics, he lamented the consumer’s irrational fixation on price. He pointed out that most of us won’t hesitate to grab a generic bottle of ketchup over a trusted brand for a difference of only 20 cents – which breaks down to no difference over the months it sits in your fridge: How do you sell a better product to a customer who’s not willing to pay 1 cent more per week?
It’s the advantage (and burden) of major brands that they specialize in making a high-quality, consistent product over years and decades. (If there was an outbreak of botulism in a Campbell’s or Del Monte, would you ever buy that brand again?) Meanwhile, generic food companies can just grab whatever ingredients are cheapest at the moment, throw them together and ship them out. A less than ideal batch may sneak its way into various supermarket generics once in awhile, but even if one generic brand gets associated with poor quality, they can just come up with a new (equally generic sounding) name. So how can a branded food company make a profit when they have to put all this extra effort into product quality and consumers nonetheless treat it like a commodity? And, of course, it doesn’t help when consumers perceive your product as a low-rent item in the first place…
This probably sounds like a “who cares? / too bad for them” type of problem but it has repercussions outside of the ketchup game. People have the same attitude towards all products – including fresh fruits and vegetables. Now I, as I imagine many of you would, quickly protested this idea. Unlike ketchups, I perceive huge difference between “high” and “low” quality apples and oranges. I won’t touch anything that looks like a Red Delicious and I don’t even buy tangerines (let alone oranges) unless they’re specifically labelled as clementines.** He took my point and then asked if I cared what variety my apple was (so long as it exceeded my stated threshold). I said “no” and he elaborated on the problem – that although I have a threshold for apple quality, the likelihood of the apple product I would buy on a given week (or whether I’d buy apples at all) was very strongly linked to what was on sale at the time.
So how does all this relate to transgenic food? People like myself have been flogging the idea that the public resistance to transgenic food is due in part to the lack of a consumer benefit – all the traits so far benefit the farmer (by yield, convenience and lower risk). This will all change, so the story goes, when transgenic Botrytis-proof strawberries hit the supermarket shelves. “Ah!,” the customer will shout, “Look at these beautiful strawberries surrounded by ones gray with mold!” This only works though if customers are really dedicated to buying strawberries when they head to the supermarket. If instead the customer doesn’t really care whether he can get strawberries on any given day, he just won’t buy strawberries on the days when the choice is between gross molded “generics” and expensive transgenics.*** Maybe he can just buy strawberries another day.
The breeder definitely had a point, but I immediately brought up the hordes of people I know who gladly hand over extra cash to get perceived superior quality (or merely philosophy) from the Trader Joe’s and Whole Foods of the world. But, he emphasized, these are the same people who are most opposed to GM foods.
It was a disheartening series of arguments. Though, of course, if you can find a way to make a consistent profit branding something as ordinary as ketchup, it seems like there should be a place for a slightly more expensive fresh market (out of season) tomato that still tastes like a tomato…
* “Food” brands that are actually vertically integrated enough to do their own breeding include Campbell’s, ConAgra (Hunt’s), Heinz, Land’O Lakes, Frito-Lay and Orville Redenbacker.
** Well, when I’m too far from the West Coast, that is.
*** Although a difference in price will be less inevitable if regulations get pared back
Written by Guest Expert
Matt DiLeo has a PhD in Plant Pathology from UC, Davis. During his postdoctoral research at Boyce Thompson Institute, he researched unintentional effects of genetic engineering. Matt builds R&D teams and biotech platforms: genome editing, gene discovery, microbials, and controlled environment agriculture.
Off the top of my head I’d say yes, all traits directly benefit the farmer. I would also say they indirectly benefit the consumer, but it’s not a tangible benefit so like you say, they don’t care. Only consumer trait I can think of is the Flvr-Savr tomato, and it failed.
If I recall correctly, Hunt’s (or is it Heinz?) is breeding tomatoes that are sweeter in hopes of developing tomatoes that don’t require sugar to be made into a palatable ketchup. That might be something people would pay for, although there likely wouldn’t be much if any of a calorie difference as the added sugars are replaced with “natural” sugars.
I was recently surprised to learn that Land O Lakes has a hand in forage breeding. Even with all the time that has been spent talking about GE alfalfa, the ‘Monsanto’ frame obscured who was actually breeding the alfalfa: Forage Genetics, owned by Land O Lakes. I had been eating Land O Lakes butter for several years since I moved to Wisconsin and didn’t know that. (I had Clover Stornetta before the big move – from my hometown of Petaluma)
It certainly puts a different dimension to it – why would a dairy company be particularly interested in herbicide-tolerant alfalfa? Perhaps a combination of longer stand life or faster establishment, and fewer noxious weeds in the mix. Similarly, I have heard interest in the tomato industry for GE processing tomatoes that have less water in their flesh to reduce the cost (and environmental impact) of drying the tomatoes to make paste.
There is something to be said for price – not only can it mediate small differences in appeal (20 cents less for generic, OMG I’ll do it despite my brand identity!), but it can also make somewhat unreachable product reachable. GE carries a small price penalty, but if it at the same time provides an added value, the perception of the product at even a regular price can make the difference. There was a paper that came out in 2009 that showed that people would rather buy a local GE apple than a long-distance conventional, based on price levels. (Penalty for GE was slightly lower than benefit for being local) So while the premium price buyers being against GE might be cause for pessimism, there’s still room in this for the non-bourgeois.
Plus there may be tension in some of those Whole Foods shoppers if they start seeing something they really want in combination with something they are a little anxious about. I have talked with people at an Organic farming conference who seemed interested, at least to know more about, GE.
Back in the day, dairy farmers also grew their own alfalfa and corn (for fodder) and oats (for fodder and straw bedding). Accordingly, the dairy farmer directly benefited from efficiencies in crop production and would gladly adopt GM versions.
Those days are over. The dairy farmer buys alfalfa, corn, and oats as cheaply as possible. For them, that makes the benefits of GM very nearly intangible.
Mat – I think you may be too focused on the U.S. food system. We have created an industrial food system that does a good job at growing fungible inputs which are processed, standardized and branded. Generic brands are somewhat cheaper, and consumers respond to price point. On the other hand you may be interested in customer values and IP regimes other than trademark/patent & price.
As one example, the EU has the Protected Geographical Status (http://en.wikipedia.org/wiki/Protected_Geographical_Status). In this case the name that is protected is not a company name, but a region or process for a particular genome of fruit/veggie or cheese/sausage etc. What I like about this IP regime is that it explicitly takes into account many non-human actors. For example
This IP regime protects a “standard” process, but also preserves genetic diversity and informally protects culinary tradition and landscapes required to make those foods. You don’t HAVE to make cheese this way, you can make velveeta-like industrial cheese, you just can’t call it “Roquefort”.
The U.S. is not a signatory to this legal framework, which is a shame because it would give us another tool for creating food that is standardized, labeled and protected, protects a range of human and non-human interests. This framework inherently privileges tradition and localization of food systems, whereas our national-processed-branded food system supported by trademark/patent IP priveleges larger processing companies and secrecy.
For example, the Coke formula is CBI, but under the PDO IP regime you HAVE to explicitly describe how the cheese/sausage/beer is made in order to get approved. You can see how different these regimes are.
I would think given enough wealth and time the current consumers of Whole Foods et al. would aspire to this kind of food system for the U.S. but we have to work within the constraints we currently have, so many are moving over to Farmers Markets where they are sprouting up again.
Now your interest may be: could one create a GMO with PDO status? A transgenic plant customized for a particular ecoregion that is good for farmer, eater and the non-humans involved in the food production process…..maybe in America. But that would require a change in thinking about how and why transgenic plants are created. So far transgenic plants in the U.S. are primarily field crops, that are fungible and are processed into other things (i.e. BT & Round up Ready Corny, Soy Cotton….)
And because the U.S. is geographically large and diverse, the emphasis is on national rather than regional or local feedback loops, and there is a major disconnect between food production, processing and consumption…but I would be very interested in hearing more…
The official U.S. position on genetically-modified organisms is that there is no difference between them and natural organisms. The issue goes even further to suggest that no country should be able to require mandatory GMO labeling on food items, even though science shows that GMOs act differently in the body than do natural organisms and are a threat to health.
“The official U.S. position on genetically-modified organisms is that there is no difference between them and natural organisms.”
This isn’t true. The US heavily regulates the commercialization (and even research field testing) of transgenic plants but not plants produced by non-transgenic methods. (I’ve ironically spent a good chunk of this week trying to sort out APHIS’ permitting system to move transgenic organisms around).
” science shows that GMOs act differently in the body than do natural organisms and are a threat to health.”
I’ve never seen ANY evidence of this. Please provide some primary sources to back up your claim.
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