Dannon, other food companies leverage consumer preferences on GMOs to gain market share

Mike Opperman | Milk | October 20, 2016

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[Editor’s note: In April, Dannon announced that it would start to produce non-GMO yogurt and establish non-GMO feed supply chains for the dairies it contracts with in order to market its yogurt as ‘more sustainable.’ Recently farm groups condemned this move in an open letter saying that eliminating GMOs will decrease sustainability. You can read more about their objections in this GLP post]

Both [Dannon and farm groups] believe in giving consumers the right to make their own choices about the food they eat. Both organizations state that sustainable agricultural practices can be obtained through the use of GMO crops.

…Bill Drake, an economist with the Dyson School of Applied Economics and Management at Cornell University says “[Supermarkets] operate on a 1.5% margin and typically see 1.5% per year growth in sales. The only way to increase sales is to steal market share.” He says this forces food manufacturers to … appeal to traditional customers through price, taste and convenience; or capture consumer preference through product differentiation and niche marketing. Marketing efforts that communicate non-GMO products and sustainability is one way to achieve the latter.

…[T]hat’s where Dannon comes in. The company understands that consumers may not be fully aware of what “sustainability” and “non-GMO” really means, but based on consumer research they know that there is a preference for products that offer these claims. Hence the development of products that fill that demand to capture much valued market share.