GMO food labelling: what works (and what doesn’t) for consumers?
When it comes to GMO food labelling, new research has found the type of label and policy regimes can significantly impact consumers’ willingness to pay
Although the use of genetically modified (GM) foods has become widespread across the world, scientific and public opinions diverge about their safety. Most scientists claim that genetically modified organisms (GMOs) in foods are safe for human consumption and offer societal benefits such as better nutritional content. Yet some scientists disagree, citing concerns about possible long-term effects of GM foods on human health and the environment.
Many consumers also remain sceptical about their safety. A 2013 New York Times poll, for example, showed that 75 per cent of Americans expressed concern about genetically modified organisms (GMOs) in their food, with most worried about their potential health effects. Furthermore, 93 per cent of respondents said foods containing such ingredients should be identified. This concern has been recognised by many governments, with the US becoming the 65th country in the world to mandate GMO labelling on food products last year.
How countries label GMO foods
The opposing views that firms and consumers have about GM foods create a fundamental tension in how such foods should be labelled, which was the central focus of the research paper, GMO Labeling Policy and Consumer Choice (published in the Journal of Marketing). "Our research team noticed that different countries adopted different labelling policies for genetically modified foods,” said Dr SunAh Kim, a lecturer in the School of Marketing at UNSW Sydney.
“While some countries use the mandatory label that food producers should disclose whether the food contains GM ingredients (via a label such as “contains GMO”), other countries use the voluntary label regime to encourage firms freely promote whether the product is made with non-GM ingredients (via a “non-GMO” label),” said Dr Kim, who conducted the research in conjunction with Assistant Professor Youngju Kim at the Neoma Business School and Professors Neeraj Arora and Arthur Nielsen Jr at the University of Wisconsin–Madison.
Why GMO food label policies vary
The research reviewed why there is variation in GMO label policy across countries, who supports or is against mandatory labels, and the effects of GMO (e.g., “containing GMO”) or non-GMO (“not-containing GMO”) labels on consumers’ food products choice. Dr Kim and her co-authors researched the GM food market and labelling policies adopted by different countries, and found that GM foods are widespread worldwide, but scientific and public opinions diverge about their safety.
“Scientists generally agree that genetically modified organisms used in food production are safe for human consumption and have the potential to offer societal benefits, such as increased nutritional content and reduced environmental impact,” she said. “However, there is a disconnect between this scientific consensus and the negative attitudes that many consumers hold toward GMOs.”
This divergence in views creates a fundamental tension for policymakers regarding how GM foods should be labeled. On the one hand, labelling GM foods as such could give consumers the information they need to make informed choices about what they eat. On the other hand, Dr Kim said such labelling could reinforce negative attitudes toward GMOs and create an impression that GM foods are less safe or less desirable than their non-GMO counterparts.
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What the research says about GMO labelling for policymakers
To address this tension, the research paper said policymakers must carefully consider the scientific evidence regarding GMO safety and weigh it against the preferences and attitudes of the general public.
“They must also take into account the potential benefits that GM foods can offer in terms of nutrition and sustainability. Ultimately, the goal should be to provide consumers with accurate information about the foods they are eating, while also fostering a more informed and nuanced public discourse about the risks and benefits of GMOs,” said Dr Kim, who explained the research process that was undertaken to answer this important policy question.
Four lab and online choice experiments were conducted, and in the first study participants were asked to choose the product they preferred the most across five product categories. The results indicated that different labelling regimes have a significant impact on consumers’ demand for genetically modified foods. Specifically, Dr Kim said labels such as “non-GMO” (absence labelling) and “contains GMO” (presence labelling) act as negative signals for GM foods and tend to decrease their market share. “The effect is particularly pronounced under mandatory policies, such as presence labelling, compared to voluntary policies, such as absence labelling,” she said.
In the second and third studies, the researchers investigated the impact of GMO labelling (absence vs. presence) on consumers’ sensitivity to the GMO attribute, price, and category purchase. The results showed that presence-focused labelling (“contains GMO”) had several effects on consumer behaviour. “Firstly, it made consumers more sensitive to the GMO attribute, meaning they paid closer attention to whether a product contained GM ingredients or not,” said Dr Kim.
“Secondly, it made consumers less sensitive to price information, suggesting that the presence of GMOs was a more salient factor in their decision-making than price. Finally, presence-focused labelling made consumers more reluctant to make a purchase in a category, possibly because the presence of GMOs made their choice more difficult and less certain.”
These effects can be explained by the fact that presence-focused labelling enhances consumers’ concerns about GMOs and encourages them to pay greater attention to GMO information, and Dr Kim said this may make it harder for consumers to choose as they must balance their preferences for non-GM products with other factors such as price and taste. The preference for non-GM products was even stronger when both “non-GMO” and “contains GMO” labels were displayed on the products.
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A final study also found that the signal conveyed by the GM label, as decided by policymakers, has a significant impact on consumer choice. For instance, Dr Kim said a green logo (positive label) may be interpreted as an endorsement, whereas a yellow logo (negative label) may be viewed as a cautionary signal.
“Participants who were exposed to positive GMO labels tended to have less negative attitudes towards GMOs than those who were exposed to neutral GMO labels. We also found that the GMO label format had a greater impact on consumers who did not have strong pre-existing opinions about GMOs, indicating that the preference for GM foods is highly malleable for a large segment of consumers,” said Dr Kim, who explained these findings suggest that policymakers can influence consumer attitudes towards GM foods through the use of positive or negative labels.
“Positive labels may help to reduce negative attitudes towards GM foods and increase their acceptability. However, negative labels may reinforce existing negative attitudes and create further barriers to acceptance,” said Dr Kim. “Additionally, the impact of labels may be greater for consumers who are less informed or less opinionated about GMOs, indicating that efforts to educate the public about GM foods may be important in shaping attitudes towards them.”
Practical considerations for policymakers
In summary, the study demonstrates that the type of label and policy regime can significantly impact consumers’ willingness to pay. More specifically, consumers are more willing to pay a premium for non-GM products in mandatory (rather than voluntary) regimes and when the GMO label signals a less positive image.
The research raises some important implications for both policymakers and consumers, according to Dr Kim, who said all forms of GMO labelling have significant implications which can reduce the demand for GM foods. “Even a neutral GMO label may make consumers focus on the negative aspects of GMOs and pay less attention to price information, making them more hesitant to purchase in that category,” said Dr Kim, who gave the example of the positive “bioengineered” logo adopted by the United States, compared to the yellow triangle resembling a caution sign used in Brazil, which may worsen the impact of GMO labelling.
Practical considerations for firms
Voluntary and mandatory GMO labelling regimes both incentivise companies to add premium-priced non-GM products to their offerings. However, Dr Kim said the research indicates that these incentives are much stronger under a mandatory labelling regime compared to a voluntary one.
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“Mandatory labelling policies increase the salience of the GMO attribute, making it more important to consumers and creating a stronger preference for non-GM products. This stronger demand can result in firms introducing non-GM products to their product line,” she said. “In contrast, under a voluntary labelling regime, the demand for non-GM products may be weaker and less predictable, which may reduce firms’ incentives to offer these products.“
This presents a challenge for marketers from GMO food manufacturers, who may face reduced brand share and category demand as a result of mandatory labelling regimes. On the other hand, she said non-GMO food manufacturers can benefit from labels, as consumers tend to value product features over price. “To counteract sales losses, GMO food manufacturers may need to consider alternative promotional strategies beyond price cuts,” Dr Kim concluded.