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LONDON

THE NETHERLANDS
/ GREAT BRITAIN

Genetically modified organisms


in food and beverages

HOW FEAR OF A REVOLUTION THAT ALREADY


HAPPENED IS PREVENTING INNOVATION AND
CONSUMER TRANSPARENCY IN THE EU
MANAGEMENT
SUMMARY

C
ontinued population growth, increasing prosperity, the collapse of
biodiversity and global warming are putting unprecedented pressure
on the global agri-food system. In continuation of classic breeding
& selection and 20th century methods, recent technological break-
throughs in molecular genetics offer revolutionary innovation
opportunities to address the daunting challenges of the 21st century.

Genetically modified organisms (GMOs) and GMO-derived products


developed using molecular genetics techniques already play a central
role in everyday life. Regardless, past excesses with GMO crops and
lobbying from anti-GMO stakeholders have given genetic modification
a poor public image and led to a highly restrictive regulatory landscape
in food & beverage (F&B) applications, particularly in the EU.

Indeed, the EU’s GMO regulations are based on outdated technological


insight from 2003 while providing significant loopholes to F&B players
to mask the use of GMOs in their products. As a result, EU regulations
give a false sense to EU citizens that they do not consume GMOs,
disincentivize transparency and harm the EU’s ability to innovate.
By contrast, the more permissive regulatory landscape in the USA has
enabled significant innovation and is progressing rapidly in terms of
transparency towards consumers.

A recently published study about New Genomic Techniques (NGTs)


commissioned by the EU acknowledges these issues and cautiously
calls for less stringent regulation, notably to realize the EU’s goals in
terms of sustainability, nutrition and health.

The authors of this report are convinced that GMO technology will
continue to play a central role in addressing the major challenges of
the 21st century. We therefore call for (I)food ingredient and bio-
technology players to continue investing in GMOs and to focus
more on delivering added value to consumers and society; (II) F&B
players to invest in technology while being transparent towards
consumers; (III) EU governmental bodies to update their regulatory
Cover photo 1067761172/Getty Images

frameworks to account for technological processes, which will allow


them to reach sustainability, environmental and health goals; and (iv)
non-governmental organizations (NGOs) and lobbying organizations
to adopt a more nuanced stance that condemns only specific aspects
of GMO technology that have led to abuses while recognizing the
possible benefits of responsible GMO innovation.

Roland Berger 2 GMOs in Food & Beverages


CONTENTS

MANAGEMENT SUMMARY 2

1/ UNPRECEDENTED PRESSURE ON
4
THE AGRI-FOOD SYSTEM

2/ GENETIC MODIFICATION AS A DRIVER


6
IN AGRI-FOOD

3/ MOLECULAR GENETICS: A POTENTIAL


13
GAME CHANGER

4/ HOW GMOS ARE ALREADY SHAPING OUR


15
WORLD

5/ PAST EXCESSES AND PUBLIC PERCEPTION 19

6/ ORGANIZED OPPOSITION TO GMOS 22

7/ REGULATORY LANDSCAPE 24

8/ IMPACT ON CONSUMERS AND INNOVATION 31

9/ CHANGING PERCEPTION 34

10/ RISK MANAGEMENT 37

11/ CALL TO ACTION 39

CONCLUSION 41
1/ Unprecedented pressure on the agri-food system

The global agri-food system is facing daunting and


unprecedented challenges to deliver sufficient, nutritious
and healthy food

Major 21st century trends such as continued population growth, increasing


prosperity, the collapse of biodiversity and global warming are putting unpre-
cedented pressure on the global F&B supply chain, which needs to rise to the
challenge of delivering healthy nutrition in a sustainable manner.

The United Nations (UN) is forecasting population growth of 2 billion people in


the next 30 years, reaching 9.7 billion by 2050, which would imply a 25%
increase of food requirements if nutrition patterns were to remain as they are today.
However, this population growth is expected to occur in the context of a continued
increase in prosperity, which is expected to result in an actual increase of food
requirements of more than 50% by 2050 according to the World Resources Institute
(WRI). This dramatic increase is exacerbated by increasing consumption of
animal-based foods such as meat and dairy, which is expected to grow by almost
70% by 2050. Given high feed conversion ratios of animals, the production of meat
and dairy requires up to 10-20 times more crops than plant-based food. Overall,
the WRI estimates that an additional 3.3 billion hectares of additional land would
be needed to fill the 2050 food gap at today’s production efficiency, virtually
eliminating the world’s forests and savannas. Based on WRI projections for yield
improvements over this time period, the requirement for additional land would
still be 593 million hectares, an area roughly twice the size of India. As expansion
of agricultural land results in loss of natural landscapes, it conflicts directly with
the pressing need to bring a halt to ongoing global warming and loss of biodiversity.
Moreover, climate change is expected to disrupt the efficiency of existing agri-
culture through mechanisms such as rise of global temperatures, changes in
precipitation patterns, an increased frequency of droughts and heatwaves, sea-

A.1 / Total land area used for agriculture (ha bn)


5.0
Oceania

4.0 Africa

India
3.0
China
Rest of Asia1
2.0
Middle East
Latin America/Caribbean2
Canada
1.0
United States
Russia
0.0 Europe3
1600 1650 1700 1750 1800 1850 1900 1950 2016
Source: Our world in data

Roland Berger 4 GMOs in Food & Beverages


level rise and a higher risk of more intense natural disasters. Given the practical
infeasibility of expanding land use and climate-related decreases in efficiency, the
pressure to find solutions to increase production and consumption efficiency in the
F&B supply chain is tremendous.

Beyond the challenge of providing the mere quantity of nutrition needed to feed
the world, population aging and increased prosperity have resulted in a surge of
diseases related to aging and prosperity. In line with the ongoing transition from
palliative and curative healthcare to preventive healthcare, providing healthy
nutrition will become an increasingly important task for the F&B sector in the
coming decades. For example, improving the quality of nutrition will be critical
to address the prevalence of overweight and obesity, estimated at nearly 40% and
13% of adults globally, respectively. As a result, the F&B sector will need to
provide solutions to reduce unhealthy levels of sugar, salt and fat, while providing
sources of health-promoting micronutrients such as vitamins and omega-3 oils.

While non-technological solutions such as managing demand, reducing waste


and investing in existing technologies are absolutely critical to stand a chance
of successfully addressing future global nutrition needs, they cannot concei-
vably deliver on the required efficiency improvements. Efficiency improvement
will need to exceed that of the period between 1961 and 2010, which saw the
emergence of automation, synthetic fertilizer and scientifically bred seeds and
resulted in +50% to +200% yield increases for main agricultural crops. To
deliver such efficiency improvements, innovation will need to come from a
broad range of technologies, such as AI, robotics and biology. Among the most
promising technologies, none have raised as much controversy as molecular
genetics, the technology that enables targeted genetic modification of living
organisms. Rapid technological advances, notably recognized by the 2020
Nobel Prize in Chemistry for gene-editing technology CRISPR/Cas9, are
pushing the limits of genetic modification and have the potential to revolutionize
many industries, among them the agri-food industry. A

A.2 / Crop efficiency – Change in crop yields since 1961 (metric ton/ha, relative to 1961)

200% Wheat
Corn

150%
Rice
Soybeans
Barley
100%
Bananas
Beans, dry
Potatoes Peas, dry
50% Cocoa
Cassava

0%
1960 1970 1980 1990 2000 2010 2020
Source: Our world in data

Roland Berger 5 GMOs in Food & Beverages


2/ Genetic modification as a driver in agri-food

Molecular genetics is a modern technology to modify DNA


that can be seen as the next step in humanity’s long history
of genetically modifying organisms used in agriculture

There are significant inconsistencies in the terminology and definitions


relevant to genetic modification between public perception, regulatory
frameworks and even scientific literature. Therefore, it is critical to untangle
the underlying biological and technological concepts clearly in order to enable
a meaningful discussion.

At the heart of genetic modification is deoxyribonucleic acid (DNA): a molecule


contained in the cells of every living organism that contains sequences of four
biochemical letters: adenine (A), cytosine (C), guanine (G) and thymine (T).
Within the DNA, the sequence of A, C, G and T encodes all information needed
for the organism to live and replicate. The DNA contains defined segments
called genes, which can be read as blueprints and used to make ribonucleic acid
(RNA). RNA in turn functions as building instructions for the assembly of
proteins from simple building blocks called amino acids. The thousands of
proteins encoded within the DNA of a cell fulfill all functions needed by the
organism to live and replicate, and give it all of its unique properties. Due to
the importance of genes as DNA fragments encoding proteins, the process of
modifying DNA is referred to as genetic modification or engineering. B

The DNA of all living organisms is naturally dynamic: small and big changes
in the A, T, C and G sequences of DNA frequently occur and are referred to as

B/ The role of DNA, RNA and proteins in living organisms


All living organisms ...are built up of DNA consists of Segments of DNA RNA can serve as building
such as humans, microscopic living strings of four letters: referred to as genes instructions for the cell to
animals, plants, cells that contain DNA, Adenine (A), Cytosine can be read as blue- build all the proteins from
mushrooms and the molecule contain- (C), Guanine (G) and prints and used to simple building blocks
microorganisms ... ing all information to Thymine (T) make RNA called amino acids
make an organism

The thousands
of different
proteins fulfill
all functions
needed by the
GENE RNA living organism

DNA

RNA PROTEIN

Source: Roland Berger

Roland Berger 6 GMOs in Food & Beverages


mutations. These mutations occur constantly as a result of natural mechanisms
such as repair of DNA damage (e.g. due to exposure to UV light from the sun),
mistakes in the replication of DNA (e.g. when cells multiply) and “programmed”
DNA mutation (e.g. ensuring the adaptiveness of the human immune system).

Moreover, DNA mutations were critical to the emergence of all life forms as we
know them. Indeed, they provide a mechanism to create diversity by generating
new DNA variants. While most mutations are meaningless and do not have any
consequences for the organism, some can result in new properties. If resulting
properties are beneficial to the survival of the organism, the mutation will likely
be passed on to its descendants, while detrimental mutations will likely end up
dying out. This concept is commonly referred to as survival of the fittest.
Together, the process of DNA mutation and survival of the fittest provide the
mechanism for Darwin’s theory of natural evolution. The overwhelming majority
of scientists agrees that every single living organism on earth evolved from a
single ancestral life form through small incremental mutations to DNA. While
DNA mutations are typically associated with being unnatural, it is actually fair
to say that they are not only part of nature, but a critical part of it without which
neither humans nor any other life form on Earth would exist.

Paradox

Genetic mutations are seen as unnatural, while


they are actually a critical part of life without which
neither humans nor any other life form would exist

Genetic mutations can result from a broad range of molecular mechanisms and
can vary in magnitude from a change in a single letter in the DNA code to
duplication of the complete DNA. Moreover, the DNA of different species can
naturally mix, for example when they reproduce. Due to the complexity of
living cells, even small mutations can have significant impact. A few examples
of such simple mutations with everyday life impacts are:

The replacement of a single “C” with a “T”


enabled adult humans to digest animal milk – Individuals that
do not have such a mutation are typically lactose intolerant

The replacement of a single “G” with a “T”


gave some domesticated dogs long hair (e.g. golden retriever)

The replacement of a single “G” with a “T”


made rice grains stay attached to the plant when ripe instead of
shattering – Without this mutation, rice could not be harvested
effectively

Roland Berger 7 GMOs in Food & Beverages


As may already be sensed from these examples, genetic mutations were of
particular significance in the process of domestication. When humankind
adopted agricultural lifestyles, the evolution of agricultural plants and animals
started to be heavily impacted by human selection, as opposed to natural
selection. As humans selected plants and animals to be cultivated or held as
livestock, they promoted the survival of variants with desirable properties for
humans. Millennia of human selection resulted in many of the crops and livestock
we know today, which differ significantly from the ancestors they evolved from.
While the process of domestication did not require any knowledge about the
existence of DNA, it nonetheless strongly shaped the DNA of countless animals,
plants and microorganisms that are central to modern agriculture. For example,
common wheat is actually a hybrid between two species of plants which has
six copies per cell of its complete DNA. Therefore, selection and breeding can
rightfully be described as genetic modification, albeit without requiring
knowledge of underlying mechanisms of DNA modification. C

FIRST APPLICATIONS OF MODERN GENETIC MODIFICATION


Up until the 20 th century, domestication was a slow and incremental process of
breeding and selection. With modern science, however, humankind became
aware of the existence of DNA and started to apply genetic modification
intentionally. The first practical applications of modern genetic modification

C/ Examples of genetic modification that resulted from domestication

CORN CARROTS PIGS MICROORGANISMS


Modern corn has Modern carrots are Pigs grow much faster Even though their existence
larger cobs contain- far larger than their than boars, do not have was unknown, domestica-
ing far more grains of undomesticated tusks and are less tion shaped microorganisms
corn than its ancestor relatives and are aggressive than for millennia – They notably
teosinte orange rather than undomesticated boars became better at preserving
white or purple foods and creating pleasant
taste

BANANAS DOGS HUMANS


Modern bananas lost Dogs are some of the The DNA of humans was also shaped
their seeds and are first domesticated by domesticated species – E.g.
far bigger than their animals and are less mutations to break down lactose
undomesticated aggressive and more and alcohol improve humans’ ability
relatives docile than their to consume animal dairy and
Source: Roland Berger ancestors, wolves alcoholic drinks

Roland Berger 8 GMOs in Food & Beverages


D/ Timeline of modern genetic modification of tomatoes

FROM INDUSTRY ADVANTAGE... ...TO CUSTOMER ADVANTAGE

1994 USA 1996 UK 2021 JAPAN ONGOING

Slow-ripening “FLAVR The company Zeneca Soft launch of tomato Scientists used CRISPR/
SAVR” tomato is made commercializes a cheap with five times the Cas9 gene editing to make
by Calgene (later tomato paste in the UK amount of GABA, an wild tomato varieties suitable
bought by Monsanto) that is cheaper than amino acid linked to for large-scale agriculture
and declared safe by regular products due to lower blood pressure. by boosting fruit size and
the FDA – This tomato’s similar GMO technology Soft launched by attractiveness, and improv-
ripening process is as Calgene’s FLAVR giving 5000+ home ing nutritional value with
inhibited to simplify SAVR – After initial gardeners free increased vitamin C and
harvesting and commercial success in seedlings. Sanatech lycopene content –
transportation, but which the GMO product Seed President: “We Critically, the new variant
consumers note a even outsold the regular are in no rush to has conserved pest resis-
lesser aroma profile products on the market, introduce the tomato tances and aroma profiles
sales fell from 1998 commercially; the that were lost in modern
onwards due mainly to important thing is to tomato variants and was
consumer concerns win over the consumer” developed in just three years
about GMOs

Source: Roland Berger

started in the 1930s and consisted of random mutagenesis: the deliberate


generation of DNA mutations by damaging DNA and/or disrupting DNA
maintenance and replication. By accelerating the emergence of mutations, such
random mutagenesis creates diversity more rapidly than breeding and selection
and therefore accelerates the process of genetic modification. Critically, random
mutagenesis only allows for an accelerated mutation speed without being able
to know what mutations will be introduced. As a result, random mutagenesis
is typically used as a blunt shotgun-like approach resulting in the introduction
of countless different mutations followed by selection of mutants that have
desired properties. Therefore, mutants typically accumulate many different
mutations resulting from “collateral damage” of which the impact is not
necessarily known. Typically, the focus of modern mutagenesis programs has
been on easily quantifiable properties, such as yield, size or preservability with
a strong focus on improving economics of agricultural production. As a result,
more subtle properties such as taste or nutritional value may even deteriorate
in the process of random mutagenesis due to collateral mutations (See case
study on tomatoes). D

More recently, since the 1970s, advanced knowledge of biology has resulted in
the development of molecular genetics: the ability to modify DNA molecules
in a targeted way. By harnessing the ability of naturally occurring proteins to

Roland Berger 9 GMOs in Food & Beverages


interact with DNA at the molecular level, scientists have developed tools to
modify specific sequences within DNA molecules in a targeted way. Concep-
tually, these molecular genetics tools can be compared with a simple cut & paste
function for text on a computer: DNA sequences can be copied from any source
and inserted virtually anywhere, potentially replacing existing DNA sequences.
As molecular genetic tools have evolved, their accuracy has improved, to the
point where the most modern tools such as CRISPR/Cas9 are able to accurately
modify individual letters anywhere in the DNA without introducing any other
mutations. Moreover, these tools can be used to introduce virtually any type of
mutation that could also occur naturally, albeit with orders of magnitude higher
speed and accuracy.

Paradox

Genetic mutations caused by humans are seen


as a recent and unnatural development, but
humans have been modifying DNA since the
beginning of agriculture ~10,000 years ago

FOUR TYPES OF MUTATION


Regardless of the method for introducing a mutation, the nature of a mutation
typically determines the impact of genetic modification and therefore the
possible risk profile. Conceptually, four types are worth distinguishing in
terms of nature of mutation:

1. Simple insertions, deletions or substitutions of small numbers of DNA


letters (e.g. inactivating a gene encoding an undesirable property)
2. Structural reorganization and reshuffling of DNA sequences (e.g. combining
two genes within an organism)
3. Transfer of DNA between individuals from the same or closely related
species, also referred to as cisgenesis (e.g. transferring disease resistance
from a wild type individual to a cultivated individual)
4. Transfer of DNA sequences between different species, also referred to as
transgenesis (e.g. introducing a gene from a different species that makes the
crop toxic to insects)

The first three types of mutations also commonly occur in natural evolution,
while transfer of DNA between different species is very rare. Moreover, by
making specific mutations occur at high efficiency, desired mutations can be
achieved orders of magnitude more rapidly using molecular genetics than
if they had to occur by chance, even more rapidly than through random
mutagenesis. As a result, molecular genetics methods are not only more effective

Roland Berger 10 GMOs in Food & Beverages


but also result in a significant expansion of the range of possible mutations by
making mutations possible that would otherwise be so unlikely that they would
probably never occur.

Specifically for transfer of DNA sequences from other organisms, the exact
nature of a mutation greatly determines the impact and risk profile of a mutation.
For example, when DNA is transferred between species, there are higher risk
profiles when transferring genes from allergenic or pathogenic organisms than

E/ Overview of different breeding techniques

Selection and breeding Random mutagenesis Molecular genetics

Principle Observation of naturally Acceleration of DNA mutation Targeted modification of DNA via
occurring diversity, selection speed by intentionally molecular genetics tools
of desired properties and damaging DNA or impairing
breeding to combine them natural DNA replication/
maintenance mechanisms

Time of Prehistory to today 1930s to today 1970s to today


application

Examples of All domesticated animals, Many modern crops (e.g. Some modern crops (e.g. corn,
applications plants and microorganisms rice, wheat, barley, pears, soy and cotton) and many
(see Figure C for examples) peas, cotton, peppermint, microorganisms
sunflowers, peanuts, grapefruit,
sesame, bananas, cassava
and sorghum) and many
microorganisms (e.g. fungi for
production of antibiotics and
yeast for production of vitamins)

Relevant Unintentional selection based Chemical mutagenesis Molecular cloning (plasmid and
methods on intuitive preference UV irradiation viral vectors)
Intentional breeding Radioactive irradiation CRISPR/Cas9

Genetic All three methods can be used to achieve similar types of mutations, ranging from single letter changes
impact to introduction of DNA from other species – The frequency at which specific mutations occur, however,
differs significantly between the three

Time to Slow Medium Fast


impact

Degree of Medium High Low


unwanted
mutations

Regulatory Not regulated as a genetically Not regulated as a genetically Typically regulated as a


status modified organism modified organism genetically modified organism

Source: Roland Berger

Roland Berger 11 GMOs in Food & Beverages


when transferring genes from food-approved organisms, which are already
frequently consumed. Similarly, there are higher risk profiles when transferring
DNA that encodes sensitive properties such as antibiotic resistance or toxin
production. As a result, the risk assessment of a genetic mutation can and should
differentiate between different types and subtypes of mutations.

Paradox

An organism with thousands of mutations with unknown


consequences made through classical mutagenesis
methods is not regulated as a GMO, while introducing
a single one of those thousands of mutations using
molecular genetics results in regulation as a GMO

Figure E provides an overview of three breeding techniques. Organisms


resulting from the three genetic modification methods are not regulated in
the same way. While regulations differ across markets, organisms modified
through selection & breeding and random mutagenesis are typically not
regulated as genetically modified organisms (GMOs), while organisms
modified through molecular genetics typically are. E

As will be elaborated upon in subsequent chapters, this regulatory distinction


did not result from a fact-based risk assessment, but simply from historic
timing: selection & breeding and random mutagenesis were already widely
practiced before GMO legislation was developed and therefore allowed, whereas
molecular genetics technology was still emerging, deemed risky and therefore
regulated. This regulatory discrepancy results in the counterintuitive situation
that an organism is considered GMO if a single letter of its DNA has been
changed using molecular genetics but non-GMO if it obtained thousands of
mutations with unknown impact through random mutagenesis, even if the non-
GMO organism has the exact same mutation as the GMO organism.

Roland Berger 12 GMOs in Food & Beverages


3/ Molecular genetics:
a potential game changer

Technological breakthroughs in molecular genetics are


revolutionizing the efficiency, invasiveness and impact of
genetic modification

Since the first molecular genetics technologies emerged in the 1970s, the
technology has made breakthrough progress enabling high efficiency without
the necessity to introduce foreign DNA. First generation technologies relied on
naturally occurring proteins that are able to cut DNA at very specific stretches
of DNA letters. As a result, genetic constructs needed to be very carefully
designed and their assembly needed to occur in vitro outside of the living
organism. Since the possible locations at which DNA could be cut were limited,
genetic constructs typically included large segments of DNA that were required
only for their assembly. Moreover, these DNA-cutting proteins were highly
inefficient at cutting DNA inside living organisms. Therefore, genetic
modification occurred with low efficiency and required so-called markers,
which could be used to select successfully modified organisms. These markers
were typically genes that allowed the organism to survive in conditions it could
not survive in before, for example by making the organism able to make required
nutrients or by giving it resistance to antibiotics. As a result of these limitations,
genetic modification was slow and inefficient. But more importantly, the
genetic modification was imperfect as it included unnecessary modifications
(commonly referred to as genetic scars) and almost systematically required the
introduction of foreign DNA from other species, making the GMOs transgenic.

Modern technologies such as CRISPR/Cas9 have revolutionized molecular


genetics by enabling targeted genetic modification anywhere in the DNA with
much higher efficiency and without requiring introduction of foreign DNA into
the genome. While CRISPR/Cas9 is also based on a naturally occurring protein,
this protein can target different stretches of DNA letters, allowing it to target
a sequence practically anywhere in the DNA. Moreover, it has very high
efficiency, which allows genetic modification directly inside the organism
without the need for markers. While CRISPR/Cas9 can be used to introduce
foreign DNA, it is not required. For example, by introducing a cut in the DNA,
CRISPR/Cas9 can induce DNA repair mechanisms that are prone to intro-
duce random mutations, enabling targeted mutagenesis that yields the same
type of results as natural mutations in breeding and selection, and as random
mutagenesis approaches. Alternatively, CRISPR/Cas9 can be combined with a
“repair fragment” of DNA that fits into the targeted DNA location that can
contain a specific combination of DNA letters or even entire foreign genes from
other species. Critically, even when introducing foreign DNA, the high
efficiency of CRISPR/Cas9 does not necessarily require the introduction of a
marker such as antibiotic resistance.

Roland Berger 13 GMOs in Food & Beverages


F/ Overview of rapidly progressing technologies that are revolutionizing
the design-build-test-learn cycle of genetic modification

DNA sequencing
Sanger sequencing
Automation Next generation
Robotization sequencing
High-throughput screening Long-read sequencing

Computational analysis Bioinformatic analysis


Quantitative data analysis Sequence alignment
Machine learning Genome assembly
VR/AR visualization Comparative genomics

Analytic methods Functional analysis


Transcriptomics Quantitative trait locus
Proteomics mapping
Metabolomics Genome-wide
association studies

Genetic engineering Host selection


Viral transformation Chassis organisms
Targeted gene editing Risk assessment
Chemical/physical Off-targeting analysis
transformation
Protein function modeling
Mutagenesis Structure prediction
Targeted mutagenesis Interaction modeling
Radioactive/UV irradiation Function prediction
Chemical mutagenesis
Design of experiments
Crossing and breeding Choice of controls
Horizontal gene transfer Statistical prediction
Sexual reproduction Bet hedging
Hybridization

Source: Roland Berger

Beyond classical genetic modification, advanced methods provide opportunities


for even less invasive meta-genetic modification. For example, it is possible to
modulate the expression of DNA by interfering with the RNA that is used to
translate genetic information into proteins, thereby changing an organism’s
properties without altering its DNA. It is also possible to modulate the packaging
and structure of DNA inside the cell, a process referred to as epigenetics, which
can modulate the expression of DNA without altering its sequence of DNA
letters. In general, as molecular genetics continues to mature, technologies will
provide a greater range of possibilities in terms of invasiveness and extent of
genetic modification.

Beyond molecular genetics, breakthroughs in other important technologies


have also revolutionized the process of genetic modification. Conceptually,
genetic modification can be described as an iterative cycle of designing,
building, testing and learning. While molecular genetics is only required for
the build step in which DNA is modified, the design, test and learn phases have
also benefited from significant technological progress. F

Roland Berger 14 GMOs in Food & Beverages


4/ How GMOs are already shaping our world

GMOs made using modern molecular genetics are already


widespread in a broad range of applications that consumers
are not always aware of

Molecular genetics already play a central role in many aspects of everyday life.
While the general public typically associates the concept of GMOs with crops
in agriculture, molecular genetics is already widespread in a broad range of
applications, notably for energy, consumer goods, animal feed, food and
pharma. G / H

G / Overview of GMOs used in different sectors and associated level of consumer concern

Energy Consumer goods Animal feed Food Pharma

GMO Canola and switch- Cotton for textiles Corn, soybeans and Corn, soybeans, n/a
crops grass for biofuels alfalfa for animal feed potatoes, papaya,
summer squash, apple,
sugar beet, tomato,
eggplant, sugarcane
and pineapple, and
ingre­dients made from
GM crops such as
sugar and starch

GMO Used for the production of GMO-derived enzymes, proteins and compounds Yeast for beer and wine n/a
micro- making, bacteria for
organisms probiotics

GMO- Enzymes to make etha- Enzymes for dish- Feed enzymes to As processing aids, Active compounds (e.g.
derived nol or biodiesel washer and laundry improve digestability e.g. breaking down pancreatin), processing
enzymes detergents starch into sugar aids, or for diagnostic
purposes

GMO- n/a Collagen for animal- n/a As alternatives to ani- Hormones, antiven-
derived free leather mal proteins, e.g. whey oms, antibody-based
proteins or heme drugs, vaccines

GMO- Ethanol, jet fuel, Bioplastics, paper Vitamins, preser- Vitamins, preser- Antibiotics, vaccines
derived compounds for electro- vatives, colorants, vatives, colorants,
compounds chemical storage fragrances fragrances, sweeteners
(e.g. steviosides),
carbohydrates
(e.g. HMOs)

GMO n/a n/a n/a Salmon Animals for research,


animals cell lines for production
of compounds

GMO n/a n/a n/a n/a Cell and gene


humans therapy

Adoption of GMOs: Widespread Well established Marginal or emerging No significant examples

Level of consumer concern: Low High

Source: Roland Berger

Roland Berger 15 GMOs in Food & Beverages


Molecular genetics have enabled improvements in terms of efficiency,
sustainability and human health through the modification of plants,
microorganisms, animals and even human cells. Due to differences in terms of
regulation and perception, molecular genetics-derived GMOs can be classified
into GMO crops, GMO microorganisms, GMO-derived enzymes, GMO-
derived proteins, GMO-derived compounds, GMO animals and GMO humans.

GMO plants are widely used as crops and the extent of their adoption is
impressive at the global level. The International Service for the Acquisition of
Agri-biotech Applications (ISAAA) estimates that 190 million hectares of
GMO crops were planted in 2019. While EU countries are a notable exception,
GMOs have reached adoption rates above 90% in many significant agricultural
countries such as the USA, Brazil, Argentina, Canada and India. According to
the United States Food and Drug Administration (FDA), 94% of all soybeans,
94% of all cotton, 92% of corn, 95% of canola and >99% of sugar beets planted
in the USA in 2018 were GMO. GMO canola and switchgrass are used for the
generation of biofuels, GMO cotton is used for textiles, GMO corn, soybeans
and alfalfa are used for animal feed and the range of GMO crops commercially
used as foods also encompasses GMO potatoes, papaya, summer squash, apple,
sugar beet, tomato, eggplant, sugarcane and pineapple. Many more crops have
been genetically modified but have not been significantly commercialized yet.
Importantly, many food ingredients such as sugar, high fructose corn syrup and
starch are derived from GMO crops.

H/ Examples of products made with or from GMOs

Detergent with Bioethanol Bioplastics Infant nutrition with human


enzymes made with GMO from lactic acid milk oligosaccharides
made with GMO microorganisms made with GMO made with GMO
microorganisms microorganisms microorganisms

COVID-19 vaccine
(e.g. AstraZeneca) Insulin Clothing Omega-3 oil
made with GMO made with GMO made from made with GMO
cell lines microorganisms GMO cotton microorganisms

Source: Roland Berger

Roland Berger 16 GMOs in Food & Beverages


FROM FERMENTED FOODS TO HUMAN GENETIC MODIFICATION

GMO microorganisms including bacteria, algae, yeast and fungi are widespread
across many industries. By modifying the metabolism of microorganisms
through genetic modification, microorganisms can be made to function as
processing aids in biochemical processes or to produce GMO-derived compounds
such as enzymes, proteins and other compounds. The first GMO microorganisms
for production of fermented foods are being commercialized, with notable
examples including GMO yeast for beer brewing and wine making
commercialized by Lallemand and Berkeley Yeast. Moreover, the first
GMO microorganisms for human consumption are also emerging, as illu-
strated by a GMO probiotic drink against hangovers commercialized by
ZBiotics. Since GMO-derived products typically do not fall under GMO
legislation, their use is much more widespread than the use of GMO
microorganisms as final products (see following paragraphs).

GMO-derived enzymes are typically produced using GMO microorganisms


and their natural ability to catalyze chemical reactions has been used in a broad
range of applications. In energy, enzymes are critical for the production of
biofuels such as bioethanol and biodiesel. In household care, dishwasher and
laundry detergents typically rely on enzymes to break down fats, proteins and
starches. In feed, enzymes are added to improve digestibility. In food, enzymes
are commonly used as processing aids, for example to make sugar from starch,
to improve extraction of juice from fruit and to improve the malleability of
dough for baking. In pharma, enzymes are used as active compounds (e.g.
pancreatin), processing aids for production of active compounds and for
diagnostic purposes (e.g. COVID-19 testing).

GMO-derived proteins are similar to enzymes but do not necessarily have the
ability to catalyze chemical reactions. Nonetheless, GMO-derived proteins are
increasingly used in food applications and are widespread in pharma. In food
applications, proteins derived from GMO microorganisms are typically used
as alternatives to animal proteins such as Impossible Foods’ heme protein and
Perfect Day’s whey protein. In pharma, proteins derived from GMO
microorganisms, GMO animal cell lines or GMO human cell lines are at the
heart of many life-saving drugs including hormones such as insulin, antivenoms,
antibody-based drugs and vaccines. Of the top ten best-selling pharmaceuticals
in 2019, seven were proteins derived from GMO microorganisms.

GMO-derived compounds are typically small compounds made using GMO


microorganisms. In energy applications, GMO microorganisms are commonly
used to produce biofuels such as bioethanol and are being developed for biobased
jet fuel production and electrochemical energy storage. In biomaterials
applications, GMO microorganisms are used to make biobased materials like
bioplastics (e.g. PLA) and paper. In food they are used to produce a broad range
of food ingredients including preservatives such as sorbic acid and citric acid,
colorants such as carotenoids and anthocyanins, fragrances such as strawberry,

Roland Berger 17 GMOs in Food & Beverages


banana and vanilla, vitamins such as vitamin E and C and fatty acids such as
DHA (i.e. omega-3). In pharma, GMO microorganisms are notably used to
produce small compounds like antibiotics and vaccine ingredients.

GMO animals have so far been used mostly for research purposes. However,
with the FDA’s approval of the GMO salmon AquAdvantage, the first GMO
feedstock animal is being introduced to the market. Furthermore, laboratory-
cultivated animal cell lines are routinely used for the production of GMO-
derived compounds for the pharmaceutical industry (see GMO-derived protein).

GMO humans are a highly sensitive topic with very negative connotations, for
example with eugenics concepts central to Nazi dogmas. However, it is relevant
to differentiate between embryonic and somatic genetic modification.
Embryonic genetic modification occurs in the embryonic state and modifications
will be included in all cells of the individual, as well as being passed on to their
progeny. In 2018, the world was shaken by the announcement that a Chinese
scientist had applied the molecular genetics technology CRISPR/Cas9 for
embryonic genetic modification of two human babies. While the genetic
modification had the ethically defendable intention to make the babies resis-
tant to HIV-induced AIDS, the scientific and ethical community near-
unanimously condemned the experiment and urged the international community
to hold off on embryonic genetic modification until technical and ethical
concerns can be addressed. Somatic gene editing is much less controversial and
consists of the targeted genetic modification of specific cells of the human body.
Somatic genetic modification has been used successfully to treat cystic fibrosis
and is at the heart of cutting-edge cell and gene therapies such as T-CAR, which
can be used notably against cancer by activating the body’s own immune cells
through genetic modification.

PARTICULAR CONSUMER CONCERN IN FOOD & BEVERAGES


While molecular genetics have been applied for a wide array of products and
applications, consumer awareness and level of concern varies significantly. In
general, levels of concern increase with perceived emotional proximity:
applications distant to the consumer such as generation of energy and feeding
of livestock typically are of low concern, while levels of concern are high for
applications close to the consumer such as the food they eat and their own body.
In parallel, level of concern is mitigated when a strong added value of GMOs
is evident, for example for life-saving pharmaceuticals such as GMO-derived
insulin. As a result of these dynamics, the use of GMO gives the highest level
of concern in the context of food due to high emotional proximity of food and
relatively low perceived added value.

Roland Berger 18 GMOs in Food & Beverages


5/ Past excesses and public perception

Excesses in the past have harmed public perception of GMO


technology and are still used by lobbyists to maintain anti-
GMO sentiment among the public

Public perception of GMOs in food applications was strongly shaped by the


genetically modified crops for which innovation has been strongly focused on
creating cost savings and efficiency improvements for the agricultural industry.
The largest applications of GMO crops have been herbicide tolerance (e.g.
Monsanto’s Roundup Ready crops) and insect resistance (e.g. Bt crops).
Both herbicide and insect resistance applications have been subject to much
controversy.

The introduction of tolerance to the herbicide glyphosate in crops using genetic


modification has been closely associated with chemical herbicide treatment for
weed control. While herbicides were widely used before GMO crops, they can
be applied much more effectively and selectively with GMO crops. Moreover,
since the expiry of Monsanto’s main patent on glyphosate-based Roundup in
2000, the price of glyphosate-based herbicides has decreased dramatically,
thereby incentivizing abundant and excessive herbicide use. Together with
relatively permissive regulation for herbicide usage, low glyphosate prices have
resulted in a dubious business model for seed suppliers in which herbicide is
sold cheap, while herbicide tolerant GMO seeds are sold at high margins. The
excessive use of glyphosate has stimulated the rise of glyphosate-resistant
superweeds, which has been signaled in over 30 countries. Remarkably, the
total use of herbicides is estimated to be lower than it would have been without
GMOs due to more targeted use of a single highly effective herbicide rather
than many different herbicides. I

I/ Estimated global pesticide reduction from the use of GMOs relative to non-GMO crops
(m kg, 1996-2018)

Estimated reduction of global herbicide use Estimated reduction of global insecticide use

331 331

242 242

112 112
40 4039 39
1 1 15 15
-5 -5
Soybean Soybean
Corn Corn
Cotton Cotton
Canola Canola
Sugar beet SugarCorn
beet Corn
Cotton Cotton
Soy Soy
(2013-2018)(2013-2018)
Source: Adapted from PG Economics

Highly tolerant to
Highly
glyphosate
tolerantInsect
to glyphosate
resistant Insect
through
resistant
Bt protein
through Bt protein

Roland Berger 19 GMOs in Food & Beverages


Moreover, GMO farming proved less disruptive to agricultural soil, as the need
for plowing decreased since weeds are killed instead of plowed under. While
herbicide tolerance is only one specific application of genetic modification, the
use of GMOs has been closely linked to unnatural and unsustainable agricultural
practices by Monsanto.

Paradox

GMOs are perceived as a threat to biodiversity


and sustainability, while they have the potential
to significantly reduce the environmental impact
of F&B

Beyond the specific application of herbicide tolerance, GMOs are seen as one
of the main drivers allowing seed breeding companies to monopolize the seed
market by issuing trademarks and IP on GMO crops. While traditional farmer
law (plant breeder’s rights) grants exclusive control over seeds to breeders of a
new plant variety, it includes an important exemption: farmers are allowed to
use seeds as a basis to create new varieties. The emergence of crop variety
patenting introduced the possibility to preclude the use of patented varieties
for breeding by others. While the first case of variety patenting was filed by
General Electric on a non-GMO bacterium that can degrade oil, the case has
been used as legal precedent to patent both non-GMO and GMO crops. Since
GMO mutations are very concrete and well-defined innovations, they are
relatively easy to patent. Based on the possibility to patent crops, Monsanto
built a strong patent portfolio protecting its GMO crops and has zealously
prosecuted American farmers who illegally replanted their seeds.

While courts have always judged in Monsanto’s favor from a legal perspective
when farmers tried to get Monsanto’s policy overturned, these cases in which
farmers faced a multibillion dollar corporation had a strong “David vs. Goliath”
component. Public opinion turned against Monsanto, and by extension against
GMOs. Perhaps the most daunting public opinion case related to seed ownership
concerns Monsanto’s introduction of insect-resistant Bt cotton in India in 2002.
Vandana Shiva, an influential antiglobalist and environmentalist, originated
the story that Monsanto’s monopolistic seed practices caused an epidemic of
suicides among Indian farmers. Propagated by other influentials such as Prince
Charles, the narrative is often used as an example of the negative impact of
GMO crops. While scientific consensus indicates that the incidence of suicide
was always high and not significantly increased by Monsanto’s crops,
the image of Monsanto’s GMO crop practices harming farmers was further
anchored in public perception. J

Roland Berger 20 GMOs in Food & Beverages


J/ Limited correlation between Bt cotton adoption
and farmer suicides in India

35 7

30 6

5
25
4
20
3
15
2
10
1
0 0
1600 1650 1700 1750 1800 1850

Farmer suicides (thousands)

Bt cotton adoption (million hectares)

Source: Gruère, G. & Sengupta, D. (2011)

Paradox

While designed to address unethical practices


by companies such as Monsanto, strict regulatory
barriers to the use of GMOs increase the power
of large companies by creating entry barriers
for small new entrants, thus making it harder to
break the market monopoly of large companies

While GMO crops have played a very visible role in Monsanto scandals, it
should be noted that it was not the technology of genetic modification itself that
caused harm, but rather industry practices applied both with GMO and non-
GMO crops. Herbicides are also used to detrimental effect with non-GMO
crops and the practice of crop variety patenting is used to create seed monopolies
for non-GMOs and GMOs alike. Regardless of the moral and legal righteousness
of Monsanto’s practices, the numerous scandals have resulted in deep public
mistrust, which has extended beyond Monsanto to a general anti-GMO
sentiment.

Roland Berger 21 GMOs in Food & Beverages


6/ Organized opposition to GMOs

A broad range of stakeholders actively campaign against the


use of GMOs

A broad range of NGOs and lobby organizations have expressed varying


degrees of opposition to GMOs, typically based on their impact on environment
and biodiversity, human health and small farmers. Some stakeholders are not
against GMOs per se, but lobby for labeling of GMOs for customer transpar-
ency. It should be noted that some of these stakeholders may have ulterior
motives for opposing GMOs. For example, the Organic Consumers Association
and Just Label It are directly sponsored by the organic food lobby, who benefit
from creating GMO skepticism.

ENVIRONMENT AND BIODIVERSITY


The use of GMOs is seen as promoting monocultures and intensive farming,
practices that reduce genetic biodiversity and crop resilience in fields. In
addition, stakeholders are concerned herbicide tolerance and other properties
of GMO crops could spread to other species, either by genetic transfer or by
creating strong selective pressure, promoting the emergence of superweeds.
Finally, stakeholders are wary about the spread of GMOs into the environment,
pointing to possible unforeseen consequences.

The World Wide Fund for Nature (WWF), Greenpeace and Friends of the Earth
oppose the use of GMOs based mainly on environmental and biodiversity
arguments. The WWF played a role in creating the Cartagena Protocol on
Biosafety to the Convention on Biological Diversity, an agreement signed by
most nations that agrees the precautionary principle should be applied for
introducing GMOs. Greenpeace is generally considered to have delayed the
introduction of golden rice, a humanitarian GMO project introducing vitamin
A in rice. Greenpeace was also instrumental in banning GMO corn and
glyphosate from Mexico by 2024, a decree passed on December 31, 2020.
Greenpeace’s main argument has been to protect Mexico’s biodiversity of corn,
as Mexico is the evolutionary cradle where corn was domesticated. Friends of
the Earth argues GM crops lead to higher levels of pesticide use and are
insufficiently assessed on environmental and health risks.

HUMAN HEALTH
Nonprofit organizations such as Consumer Reports and the Organic Consumers
Association are still opposing the use of GMOs primarily by claiming they have
been insufficiently studied to rule out possible adverse effects to human health.
Consumer Reports is an influential American product-testing organization,
known for advocating seatbelts or exposing the dangers of cigarettes, among
other topics. While it acknowledges no detrimental effects of GMOs have been
proven, it states that studies have been insufficiently conducted to determine

Roland Berger 22 GMOs in Food & Beverages


long-term effects and that animal studies have suggested that GMOs could
cause damage to the immune system, kidney and liver. It also states that the
heightened use of herbicides harms the environment and possibly human
health. The Organic Consumers Association is against GMOs as it believes
that it endangers human health, can inflict environmental and climate damage
and is always accompanied by toxic pesticides and chemical fertilizers.

Paradox

Many NGOs and lobby groups are strong advocates


for improving human health, nutrition and sustainability,
but at the same time oppose the technology of genetic
modification that could deliver these goals

SMALL FARMING PRACTICES


The current monopoly on GMO crops lies with large multinationals Bayer and
Syngenta that have the resources and investment capabilities to research and
market GMOs. The IP and patenting practices outlined earlier and resulting
monopoly on seeds are seen as threatening to local and small-scale farming.
Examples of NGOs that advocate for protecting small farmers are Greenpeace,
WWF and Friends of the Earth.

CUSTOMER TRANSPARENCY
Many stakeholders, both for and against the use of GMOs, are in favor of
transparent labeling of GMOs. For example, the NGO Just Label It mainly
wants consumers to be able to make an informed choice. Consumer Reports is
also strongly in favor of transparent labeling.

Roland Berger 23 GMOs in Food & Beverages


7/ Regulatory landscape

To prevent further excesses and under pressure of lobbyists


and public opinion, governments have set up complex
restrictive regulatory frameworks

FOOD SAFETY IN THE EU


The EU relies on a binary system where an ingredient is either fully regulated
as a GMO or not at all creates arbitrary separation lines with ambiguity and
loopholes.

In response to the increasing prevalence of GM foods and resulting excesses,


the EU introduced the Novel Food Regulation in 1997. This regulation classifies
any foods or ingredients that have no history of significant use before May 17,
1997 as “Novel Foods” and requires pre-market authorization from the European

K/ Decision tree to explain under which regulation food products fall


in the current EU regulation

Is the product an additive,


flavoring or enzyme?
(no matter whether GMO)

Does the product have a


 significant history of use
before 1997?

Is the additive, flavoring or  Is the product 


enzyme already approved?
genetically modified?
(no matter whether GMO)

 Has the product been


edited using molecular
genetics?

Before editing, did the


product have a significant
history of use before 1997?


Food improvement
Can be placed in Novel Foods
regulation approval GMO regulation
the market approval process
process

Source: Roland Berger

Roland Berger 24 GMOs in Food & Beverages


Food Safety Authority (EFSA) for their commercialization. Since 1997, the
Novel Foods regulation has been periodically updated to the current (EU)
2015/2283, but the essence of the regulation has remained ensuring free
movement of goods and consumer safety. In 2003, specific legislation for GM
food was implemented. This GMO regulation requires stringent tests to achieve
pre-market authorization for any new food or food ingredient in which genetic
modification of any type has taken place. In practice, however, new crops and
foods resulting from intentional genetic modification through aggressive
methods like chemical, UV and radioactive mutagenesis are exempted since
these technologies were already well established by 1997. GMOs made using
modern molecular genetics are not exempted and require pre-market authoriza-
tion to be placed on the market and post-market environmental monitoring of
authorized GMOs. K

The procedure to get GMOs approved is long and complex and involves multiple
decision makers. The applicant needs to demonstrate the safety of the GMO in
question in an application, which is sent to national authorities, which notify all
other member states and involve the European Food Safety Authority (EFSA).
If the EFSA authorizes the food (which typically takes 6-24 months), it forwards
its opinion to the European Commission, which provides a final decision.
Individual Member States may challenge this decision. The entire process is
made accessible to the public, allowing them to also voice concern.

While the GMO regulation is very stringent, there are numerous loopholes that
allow the marketing of genetically modified foods without needing to comply
with these strict requirements. As mentioned, products of classical genetic
modification methods are exempted. Moreover, additives, enzymes and
flavorings do not fall under the Novel Food Regulation or GMO regulation
either, as they are regulated under the mostly independent food improvement
legislation. While obtaining approval under the food improvement legislation
can be extremely onerous, once an additive, flavor or enzyme is approved, no
new approval is needed to start making an approved product using GMO
technology rather than other production methods (e.g. extraction or chemical
synthesis). As long as such products can be considered to be made “with” GMOs,
rather than “from” GMOs, they do not fall under GMO legislation. In this
context, the GMOs are seen as GM processing aids rather than GM organisms.
Moreover, additives and enzymes do not even have to be mentioned on the label
if they are i) seen as being “carried over” from one of the food ingredients or ii)
processing aids. Finally, animal-derived foods from animals fed with GMO feed
are not regulated as GMO, meaning that milk, eggs and meat from animals that
have been fed GMO-based feed do not have to be labeled as being genetically
modified and do not have to pass through the strict approval process.

In addition to rules regarding marketing of GMOs, the Regulation also provides


requirements for labeling of products containing GMOs. Any foods consisting of,

Roland Berger 25 GMOs in Food & Beverages


L/ Overview of regulations for different GMOs and GMO-derived products in the EU

Organism/product Typical process Established technology?


GMO crops Long and extensive approval process In the marketplace (currently this
pertains mainly to corn and soy,
which are almost exclusively for
animal feed)
GMO yeast (for baking, Long and extensive approval process, None approved
beer, wine) unless completely removed from the final
product
GMO probiotics Long and extensive approval process None approved
GMO-derived protein Long and extensive approval process None approved
GMO-derived enzymes Typically do not require GMO-specific reg- Routinely commercialized
ulatory approval as long as made “with”
GMOs instead of “from” GMOs; labeling
not required if considered processing aids
GMO-derived compounds As long as products are purified and do Routinely commercialized
(e.g. lactic acid, vitamins) not contain the fermentation organism,
they are not considered GMO; seen as
made “with” GMOs instead of “from”
GMOs

Source: Roland Berger

containing, or being derived from GMOs, must be labeled as such. However, there
is a significant exception to labeling – foods containing <0.9% of a GMO ingredient
do not need to be labeled as a GMO, provided that the presence is adventitious or
technically unavoidable. As a result, many food ingredients and processing aids
derived from GMOs do not need to be acknowledged on the label.

Besides GMO labeling, the label “organic” is also relevant for GMOs, since labeling
as organic is only possible if a product does not contain any GMOs. Originally drafted
to contribute to biodiversity, it fully rules out the possibility of labeling GMOs as
organic; organic food cannot contain any GMOs whatsoever. Moreover, organically
raised animals have to be raised on organic feed, meaning they cannot be fed feed
containing GMOs (in practice, the feed has to be at least 95% organic). Other
requirements for organic food are, for example, no ionization radiation, no artificial
fertilizers, herbicides and pesticides and no hormones for animals.

In summary, EU GMO regulation seems very strict, but its high degree of
complexity and numerous exemptions make it applicable to only a subset of
GMO and GMO-derived foods and food ingredients. In practice, GMO
regulation only applies to consumption of GMO crops, microbial cultures (e.g.
yeast for baking, probiotics) and proteins that result from molecular genetics,
and not to processing aids and ingredients that do not exceed 0.9% of a food.

Roland Berger 26 GMOs in Food & Beverages


Due to numerous loopholes, any products resulting from classical genetic
mutagenesis, animal products based on GMO feeds, GMO-derived enzymes
and GMO-derived compounds are not specifically regulated for being GMO or
GMO-derived. L

The emergence of new gene editing technologies such as CRISPR/Cas9 has


spurred debate about the adequacy of the current regulatory framework. Since
such technologies enable more accurate genetic modification with less unwanted
mutations than classical mutagenesis methods, they can be safer to use. However,
in 2018, the European Court of Justice ruled that GM foods made with New
Genomic Techniques (NGTs), which includes CRISPR/Cas9, fall under the
GMO regulation just as any other GMO resulting from modern genetics.

FOOD SAFETY IN THE USA


The USA have a more permissive regulatory landscape that differentiates
based on the nature of a genetic modification rather than the method used
for modification and that proposes accessible regulatory paths for low-risk
modifications.

Contrary to the EU, the USA places the burden of ensuring safety on the new
foods coming to the market by requiring less pre-market approval and having
strong liability for any wrongdoing. M

In principle, the FDA cannot stop products from going to market; rather, they
can initiate legal procedures to remove commercialized products from the
market and impose fines. The legislation is based on the premise that regulation
should focus on the nature of a genetic modification rather than the process by
which the modification was introduced. If a new food is considered to be
substantially equivalent to an existing food, the food is considered as safe as the
existing food regardless of the method used to create it. In practice, this means

M / Overview of regulations for different GMOs and GMO-derived products in the USA
Organism/product Typical FDA process Labeling requirements
GM crops
GM yeast (beer, wine)
GM probiotics Labeling required from
Voluntary GRAS* 2022 onwards if final
GM-derived protein notification product contains over 5%
GM-derived enzymes of GM matter

GM-derived compounds
(e.g. lactic acid, vitamins)

* GRAS = Generally Recognized As Safe. Source: Roland Berger

Roland Berger 27 GMOs in Food & Beverages


that as long as no foreign genes are introduced into the GM crop, it is treated as
a normal crop. This makes GMOs much easier to bring to market in the USA.

Despite there not being a legal underpinning, GM foods go through a de facto


regulatory process called a consultation with the FDA, in which companies
describe the food to the FDA to pre-empt possible problems. Any food, not only
GMO foods, can go through this. The FDA reviews GMO foods in the same
manner that it evaluates non-GMO foods: foods are either classified as additives,
which require pre-approval from the FDA before they can be marketed, or
Generally Recognized As Safe (GRAS), which means they can be launched
without pre-approval from the FDA. Moreover, having the GRAS statement is
voluntary, not mandatory. The GRAS procedure permits companies (instead of
the FDA) to determine whether the substance is GRAS or not. It can do this via
two options: if the substance has been used in food before 1958 and has a substantial
history of consumption, it is GRAS; if it does not, the company has to provide
scientific evidence to the same extent that would be required for food additives.

Paradox

Many US residents say they are opposed to the use


of GMOs in food & beverages but still eat GMOs
practically every day

The FDA is more stringent on monitoring products for retail than for food
service, as its principal task is to protect the consumer and it operates on the
premise that restaurants and other food service players are responsible and
liable towards consumers for safeguarding safety of their foods. As a result,
new GMO foods on the market are commonly launched initially through food
service, as exemplified by Impossible Foods’ market entry through players such
as Burger King and Tyson-backed New Wave Foods’ introduction of plant-
based shrimp via food service distributor Dot Foods. N

In 2019, an executive order was passed that would exempt gene-edited plants
that could also have been developed through conventional breeding from GMO
regulations (e.g. plants with a single DNA letter substitution). Before this ruling,
several rulings were already de facto saying the same. These regulations have
resulted in commercialization of many products resulting from molecular
genetics without full approval procedures. An example is mushrooms that do
not become brown when aging. These were edited with CRISPR/Cas9 yet ruled
as non-GMO by the United States Department of Agriculture (USDA) in 2016,
as the mutations were of a smaller scale than what routinely occurs in nature.

In 2014, Vermont passed a labeling law that made GMO labeling mandatory
starting from 2016. In 2016, the USA passed a federal law that pre-empted the

Roland Berger 28 GMOs in Food & Beverages


N/ Case study: how Impossible Foods brought its burger to market

Commercial events Legislatory events

2014 09.2014 | Impossible Foods’ submits GRAS


notice on soy leghemoglobin (NB: review by
the FDA is optional and primarily based on
literature)

2015 2015 | Impossible Foods’ initial notice did


not contain enough information for the FDA
to decide whether it was GRAS

07.2016 | Launch in 2016


restaurant Momofuku Nishi
10.2016 | Launch in several
additional restaurants in California

First half of 2017 | Debut in multi- 2017 10.2017 | Second GRAS determination
unit franchises like Bareburger, (two rat studies and in vitro testing)
Umami Burger, Hopdoddy

04.2018 | White Castle starts


2018
serving Impossible Foods burgers

Early 2019 | Partnership with 2019 07.2019 | FDA satisfied (although it mentions
Burger King for Impossible Whopper that if soy leghemoglobin is used as a color
additive it requires a separate petition)
09.2019 | First “raw” patty in
grocery stores

06.2020 | Direct-to-consumer 2020


e-commerce channel

Source: Roland Berger

Roland Berger 29 GMOs in Food & Beverages


O / Use of voluntary genetically engineered label on Food & Beverage products in the USA
2016 legislation to label GMOs from 2022 onwards caused a surge of voluntary re-packaging
of F&B products to include a GE label

213

427

327

200

127

54

64

51

37

20
0

0
2014

2015

2016

2017

2018

2019

2020

2014

2015

2016

2017

2018

2019

2020
P/ Use of GMO-free label on Food & Beverage products in the USA
Use of the GMO-free label is common but does not seem to have been affected by the 2016 legislation
1,104

1,413

1,475

1,612

1,485

1,167

1,146

1,045

1,370

1,279
546

864

828

850
2014

2015

2016

2017

2018

2019

2020

2014

2015

2016

2017

2018

2019

2020
New packaging New product

Source: Mintel

Vermont law, as it made GMO labeling mandatory starting from 2022 in all US
states. Despite labeling becoming mandatory only in 2022, the laws caused a
wave of voluntary GMO labeling. O

Labels typically state that a product is “genetically engineered” (GE) (or


variations on this wording), but do not use the wording “contains GMOs” due
to negative associations with the word GMO. “GMO” is only used on labeling
products that are “GMO-free”. P

The labeling law was further detailed in 2018 when the USDA announced
the National Bioengineered Food Disclosure Standard, which will require all
foods containing >5% GMOs to disclose this; this will become mandatory on
January 1, 2022. The intention of the law is to improve transparency about the
use of GMOs in food and beverages, as it is estimated that 60% of the diet of
the average US citizen contains GMOs, while most consumers are not aware of
which part of their diet contains GM foods.

Roland Berger 30 GMOs in Food & Beverages


8/ Impact on consumers and innovation

Regulatory frameworks have heavily shaped communication


around the use of GMOs, customer acceptance and the
future potential for innovation

In Europe, the rigid regulatory framework is limiting innovation and demonizing


GMOs while providing a false sense to consumers that food is GMO-free; at the
same time F&B players are incentivized to seek loopholes in the regulation to
hide GMOs on labels, which harms transparency and ultimately consumer trust.

The European regulation on GMOs is a barrier to innovation. The EU is


much more conservative than for example Japan or the US, where innovation is
ongoing. By making regulatory requirements dependent solely on the method
used to introduce any genetic modification rather than on the nature of the
introduced modification, the EU is precluding GMO innovation even for
mutations that can also happen through breeding and selection or classical
mutagenesis. Since experts assess that such mutations do not present increased
risks, the focus on method rather than nature of mutation is needlessly restricting
innovation. Some lobby groups consist of farmers for whom restricting inno-
vation is the exact purpose: this defends their existing market of non-GM crops.

Paradox

Strict regulatory frameworks for the use of


GMOs provide incentives for the F&B industry
to reduce rather than increase transparency
towards consumers

Moreover, the combination of strict rules for the use of GMOs and the presence
of numerous loopholes for food ingredients that are not to be considered GMOs
stimulate F&B players to conceal the use of GMOs in their products. GM-derived
food ingredients are used very broadly in food applications since they typically
have superior performance, sustainability and/or pricing to non-GM and
chemical alternatives. F&B players do this by tailoring their processes and ingre-
dients to be able to use GM ingredients within the regulatory frameworks. For
example, GMO-derived enzymes are commonly used as processing aids (e.g. to
break down starch into sugar). GMO functional ingredients such as flavors,
vitamins and preservatives can even be labeled as “natural”, as long as they do
not constitute more than 0.9% of the finished food and satisfy other requirements
not linked to GMO nature. Since GMO technology has become critical for many
food ingredients but remains controversial, F&B players typically use euphemisms
such as “green chemistry” and “fermented” to indicate GMO-derived ingredients.

Roland Berger 31 GMOs in Food & Beverages


The EU’s GMO regulation leads to consumers believing their food is GMO-
free, while the average consumer’s diet does in fact contain many GM and
GM-derived ingredients. It also incentivizes F&B players to use loopholes to
hide the GMO ingredients in their products. Both of these outcomes reinforce
the vilification of GMO applications in food and beverages; they also preclude
the possibility of engaging in a dialogue with consumers about the advantages
that GMOs can provide, like health benefits and a reduced environmental
footprint.

In the USA, the more permissive regulatory framework allows brands to choose
whether to use GMOs and to communicate openly and positively about the
added value GMOs have for consumers, which improves transparency towards
consumers, empowers consumers to choose innovations that warrant the use
of GMOs and stimulates innovation.

In the USA, many brands mention they use GMOs in their products. General
Mills and Mars for example have mentioned that their products contain GMOs
since 2016, albeit in small print on their packaging. Some companies even
explicitly advertise their use of GMOs. Impossible Foods for example markets

Q/ Soylent and Impossible Foods GE labeling

Source: Mintel database

Roland Berger 32 GMOs in Food & Beverages


R/ Overview of agri and food startups that use GM technology, and their disclosed
funding to date

Agriculture USD m Food USD m

Benson Hill Biosystems 242 Perfect Day 361

PivotBio 170 Memphis Foods 181

Chromatin 122 Motif FoodWorks 118


Clara Foods 57
Pairwise 115
Remilk 11
Ceres 108
Nourish Ingredients 11
Cibus 82
LegenDairy Foods/ Formi 5
Brightseed 52
Helaina 4
Tropic Bioscience 40
Finless Foods 4
Phylos Bioscience 19
New Culture 4
Agribody Technologies 2
Bond Pet Foods 1
Phytoform Labs 0
Change Foods 1
Better Seeds n/a
Imagindairy Ltd. 1
Hudson River Biotechnology n/a
Mediterranean Food Lab 0
Fybraworks Foods 0
Circe n/a
Harmony n/a

Source: Publically disclosed information, The Good Food Institute

a soy-based burger which has two GM ingredients: GM soy, and a soy heme
protein that is fermented by inserting its genes into yeast. Impossible Foods
focuses their marketing around two arguments: the advantages to the
environment of using GM soy, and the advantages of taste that fermenting heme
protein brings. Another example is Soylent, a maker of protein shakes that
contain all the calories and nutrients of a full meal. In 2016, Soylent started
marketing its brand as “proudly made with GMOs”. Both Soylent and Impossible
Foods mention that they are produced with GMOs on their packaging. Q

The openness and emphasis on added value by using GM ingredients improves


transparency towards the customer. More transparency will be gained after the
GM labeling legislation takes effect. This will make evident to consumers how
much GMO products they have already been consuming and empower them to
choose GM foods deliberately.

Finally, the more permissive regulatory environment stimulates startups to be


based in the USA. A large majority of startups, as well as the funding they have
managed to accumulate, is USA-based. R

Roland Berger 33 GMOs in Food & Beverages


9/ Changing perception

Perception of GMOs is slowly changing towards viewing it


as a key technology to address the global challenges of the
21st century in terms of sustainability, nutrition and health

The consensus among scientists is that GM foods have proven their safety to a
sufficient degree and that the decision to open up markets to more GM foods is
a societal one, not a scientific one. Transgenic foods have been a considerable
part of the human food chain for two decades without overt ill effects. Toxicology
studies have never found a plant with toxic levels of any compound, and the
single allergen that was ever introduced to soy (by including a nut protein) was
found before the product was ever eaten by humans, causing the product to stop
being developed. A meta-study of 24 long-term studies into long-term effects
of eating GMOs concluded that there were no harmful effects of GMO
consumption (Snell et al, 2012). As a result of the consensus that GMO foods
are safe, scientists have become increasingly vocal in urging society to consider
GMOs more seriously as a key technology to address the global challenges of
the 21st century. For example, in 2016 a collective of 158 Nobel Laureates have
called “upon Greenpeace to cease and desist in its campaign against crops and
foods improved through biotechnology” and called “upon governments of the
world to accelerate the access of farmers to all the tools of modern biology,
especially seeds improved through biotechnology”. They also stated “Opposition
based on emotion and dogma contradicted by data must be stopped”.

While not directly related to GMOs, the United Nations have set up 17 goals in
2015 for a “better and more sustainable future”, the Sustainable Development
Goals (SDGs), which should be reached by 2030. Multiple goals around
sustainability, nutrition and health could benefit directly from broader use of
GMOs: SDG 1 (no poverty), SDG 2 (zero hunger), SDG 3 (good health and well-
being), SDG 12 (responsible consumption and production), SDG 13 (climate
action), SDG 14 (life below water), SDG 15 (life on land), and other interlinked
SDGs. Although the United Nations has not explicitly declared itself
pro-GMO, it awarded its 2019 Global Climate Action Award to Impossible
Foods, a company notably proud of its GMO usage.

The United Nations’ Food and Agricultural Organization (FAO) has shifted its
position over the years, from very cautious to now acknowledging that
biotechnology can be of significant assistance in meeting the needs of an
expanding and increasingly urbanized population. The FAO stresses that
agricultural biotechnologies have not sufficiently benefited smallholder
farmers, producers and consumers, and in the future should benefit smallholder
farmers more.

Roland Berger 34 GMOs in Food & Beverages


2010 2019

S/ Concern over the use of GMOs has declined in Europe between 2010 and 2019

2010

2019

2010 2019

n/a 0-9% 10-29% 30-49% 49%

2019

2019

n/a 0-9% 10-29% 30-49% 49%

% of respondents concerned about GMOs: >49% 30 - 49% 10 - 29% 0 - 9% n/a

Source: Eurobarometer 2010 and 2019

%
Roland Berger 35 GMOs in Food & Beverages
The EU’s recently published advice on NGTs signals a shift from being “against
GMO” towards “acknowledging that New Genome Techniques can play a role
in agriculture”, stating that some NGT products currently being developed are
“fit to contribute to the objectives of the European Green Deal and the Farm to
Fork and biodiversity strategies as well as to the Sustainable Development
Goals of the United Nations”.

The World Health Organization (WHO) is cautious to provide a blanket state-


ment for GM foods, saying that as GMOs include different genes inserted
in different ways, GM foods should be assessed on a case-by-case basis. It
has, however, stated that GM foods currently on the market are unlikely to pose
any risks for human health.

The WWF still wants the precautionary principle to apply to GM foods but is
reluctantly willing to work with GM stakeholders. An example is the Round
Table for Responsible Soy, an initiative they set up in 2005: WWF allows GM
soy to be classified as Responsible Soy if it has a low environmental impact.

The WRI sees genetic modification as a key technology for a sustainable food
future, as it can play a role in increasing food production without increasing
agricultural land by improving crop yield. The WRI stated that “the techniques
offer too much opportunity for crop breeding to ignore them”. It states that
studies estimate that currently 20-40% of crop losses are caused by diseases
and pests and that GM may provide a faster response to these challenges in
some cases, although they caution against this use due to its possible
environmental effect. The WRI sees the greatest potential in the use CRISPR
technology for GMOs without introduction of foreign genes, which can
significantly accelerate crop yield improvement.

The Bill & Melinda Gates Foundation is actively supporting using GMO crops
and has done so since 2005, for example by supporting the rollout of Bt corn in
Africa at a price affordable to farmers there. The Foundation sees it as an
important way of securing food supply.

In addition to scientific consensus and increasing openness to GMOs by relevant


institutions, public perception is also shifting. In the EU, Eurobarometer data
shows that 66% of citizens of many EU countries were very or fairly worried
about GMOs in foods or drinks in 2010. In 2019, Eurobarometer data shows
concern about GMOs typically at 27% in EU countries. S

Roland Berger 36 GMOs in Food & Beverages


10/ Risk management

Experts offer a clear perspective on risk management


strategies that would allow use of GMOs without increasing
safety concerns relative to the status quo

While more permissive regulations for GMOs in F&B would enable innovation
in the EU, regulations need to address associated risks to ensure safe and
responsible practices. Specifically, risk management strategies will be critical
for food safety, food security, animal welfare, environmental protection,
freedom of competition and consumer acceptance. Experts offer a clear
perspective on how to broaden the use of GMOs without increasing safety
concerns over the status quo by addressing specific risks.

FOOD SAFETY
Food safety authorities such as the FDA, the WHO and EFSA agree that the use
of NGTs has not resulted in an increased food safety risk compared to non-
regulated technologies. This is particularly true for cisgenic modifications, in
which DNA is modified without transfer between different species. However,
experts indicate that transgenic modification, in which DNA material is
transferred between different species, can lead to a broader range of mutations
which may have an increased risk profile. Therefore, regulatory approval
should be more differentiated between cisgenic and transgenic GMOs and
should require more rigorous risk assessments only for transgenic GMOs, for
example to avoid toxicity or allergenicity risks. Within transgenic GMOs,
regulatory decisions should be evaluated case by case, for example with higher
requirements for introduction of genes from pathogens and lower requirements
for introduction of genes from other food organisms.

FOOD SECURITY
Climate change and increasing food needs are putting increasing pressure on
food security and require sustainable farming practices. In order to maximize
the food security benefits of GMOs, their use needs to be responsible in terms of
pesticide usage and crop resilience. Currently, the use of GMOs has notoriously
been associated with high pesticide use, causing the emergence of herbicide-
tolerant superweeds that threaten farming practices. Therefore, more permissive
GMO regulations would need to go hand in hand with regulations restricting the
use of pesticides and incentivizing sustainable pest control (e.g. via Bt crops).
Due to the abundant use of single crop variants, the use of GMOs is currently
associated with large monocultures with limited genetic diversity, making them
relatively susceptible to new pests which can ruin harvests. Since non-GMO
crops are also largely planted in monocultures, incentives to increase genetic
diversity of crops should be implemented for both GMO and non-GMO crops.

Roland Berger 37 GMOs in Food & Beverages


ANIMAL WELFARE
While EU GMO legislation is currently focused on crops, GMO technology
also has strong potential to innovate livestock practices. In order to consider
genetic modification of animals using NGTs, regulations about animal health
and welfare should be implemented. While such regulations may build on
regulations for genetic modification of animals for research purposes, they will
likely need to be expanded further for commercial application in the F&B
industry.

ENVIRONMENTAL PROTECTION
GMOs can pose a risk to the functioning of an ecosystem by lowering
biodiversity or by interacting with wild species. As a result, companies
introducing new varieties should be required to identify the impact of their use
on both biodiversity and the environment, for both GMOs and non-GMOs.
Special attention should be paid to maintaining genetic diversity (see food
security above). Regulation for GMOs should have increased focus on screening
for properties that should not spread to wild species (like herbicide resistance
or inadvertent antibiotic resistance), and pay increased attention to GMOs
that could become invasive to the ecosystem and to GMOs that are designed
to impact wild organisms (e.g. gene drives, an application of CRISPR/Cas9
that increases the frequency of a gene throughout the population in order to
decimate pathogens and pests).

FREEDOM OF COMPETITION
As the use of GMO crops has so far been associated with monopolies of large
companies and intensive farming models, regulation should contain anti-
monopoly measures and help safeguard a healthy marketplace, which should
include incentives enabling competitiveness of small companies. Beyond
ensuring freedom of competition between GMO players, regulations should
also ensure a healthy power balance between GMO players and the rest of the
F&B value chain, which could include limiting the protection granted by
patents to seed companies.

CONSUMER ACCEPTANCE
Consumers still perceive GMOs negatively, notably due to past excesses.
In order to change this perception and safeguard customer acceptance,
regulations should incentivize transparency about the use of GMOs and clear
communication about their risks and benefits.

Roland Berger 38 GMOs in Food & Beverages


11/ Call to action

We join many scientific experts and the recent policy advice


in calling biotechnology players, F&B players, governments
& regulatory bodies and NGOs & lobbying organizations to
action

In summary, ineffective GMO regulations and fear of a GMO revolution that


has already happened are restricting the European F&B landscape by limiting
transparency towards consumers and preventing much-needed innovation in
health, nutrition and sustainability. While GMO technology has significantly
progressed to a point where it is often safer than non-regulated technologies
and where it plays a critical role in many aspects of everyday life, its public
image is still shaped by past excesses associated with GMO crops. As a result,
the EU is still operating under an outdated regulatory framework that
incentivizes F&B players to seek legal loopholes for their GMO materials and
practice label whitewashing. By contrast, GMO technology has brought
breakthrough innovation without significant controversy in other sectors such
as energy, pharma and biomaterials, which are regulated differently. Moreover,
the more permissive regulatory landscape for food and beverages in the USA
has enabled significant innovation.

Experts indicate that more permissive regulations in the EU could be combined


with targeted risk-mitigation strategies to enable innovation without increasing
risk relative to current regulations. Based on similar insights, the scientific
community and the recent EU policy advice on NGTs call for a thorough
revision of the EU’s GMO regulations. Together with an ongoing shift of
public perception, the time is ripe for GMO technology to start fulfilling its
full potential in contributing to health, nutrition and sustainability goals.

To enable this much-needed innovation in an ethical and responsible way, all


stakeholders in the F&B value chain need to take their responsibility.

Biotechnology players should continue to invest in GMOs but focus less on


delivering efficiency gains and cost savings for industry players, and more
on delivering added value to consumers and society (e.g. health, taste,
sustainability). As technological, regulatory and commercial barriers are
decreased, smaller biotechnology players will increasingly become relevant,
which should break open the high consolidation of the GMO market, notably
in smaller high-value crops such as fruits and vegetables.

F&B players need to continue investing in technology while being more


transparent about the use of GMOs, notably by resisting incentives for label
whitewashing and for demonization of GMOs. Emerging food tech players can
differentiate themselves by clearly communicating about the GM-derived
ingredients in their products and emphasizing the added value they bring to the

Roland Berger 39 GMOs in Food & Beverages


consumer and society – alternative protein players, such as Impossible Foods,
Clara Foods and Perfect Day, can drive transparent communication not only
for their novel GMO ingredients, but also for GMO(-derived) ingredients
that are broadly used but not typically communicated about by established
F&B players (e.g. food enzymes, vitamins, preservatives).

Governments and regulatory bodies, in particular in the European Union, need


to update their regulatory frameworks to account for technological progress in
gene-editing technology and apply it to the F&B value chain to reach
sustainability, environmental and health goals. Specifically, the focus of
regulations will need to transition from method of modification to nature of
modification. While it remains critical to safeguard environmental and food
safety for types of genetic modification with elevated risk profiles such as
transgenic GMOs, regulations need to become more pragmatic for GMO
technologies that are equivalent in risk to non-regulated technologies. In the
process, regulations should be designed to promote transparency towards
consumers rather than the current situation, which provides legal loopholes and
incentives to F&B players to hide their use of GMOs in products. Finally,
governments and regulatory bodies need to invest in communication with the
general public. The EU’s policy advice about NGTs published in April 2021
largely echoes these requirements, and we call on the EU to translate the policy
advice into policy promptly. In this way, consumers can be sensitized to the
fact that GMOs are already in the food supply chain, and further benefits related
to GMOs can be shared.

NGOs and lobbying organizations need to step away from the standpoint that
all GMO technology is evil and adopt a more nuanced stance that condemns
technology aspects that have led to abuses (e.g. herbicide tolerance and
monopolization) while recognizing the possible benefits of responsible GMO
innovation.

Roland Berger 40 GMOs in Food & Beverages


CONCLUSION

The EU’s outdated GMO regulations are

preventing much-needed innovation to deliver

on sustainability, nutrition and health goals,

while also failing to protect consumer safety

and transparency - The time is ripe for a thorough

revision towards regulation based on nature rather

than method of modification, focused on enabling


biotechnology and F&B players to innovate

more responsibly while improving transparency

towards consumers and protecting food safety.

AUTHORS CONTRIBUTORS
AUTHORS
Alexander Belderok Joris Winkelman
Alexander
Senior Partner &Belderok
Chairman of Protix
Senior
alexander.belderok@rolandberger.com
Partner &
Sabrine Zerktouni
Chairman of Protix
alexander.belderok@rolandberger.com
Arthur Gorter de Vries
Senior Consultant & PhD in Biotechnology
Arthur Gorter de Vries
arthur.gorterdevries@rolandberger.com
Senior consultant & PhD in biotechnology
arthur.gorterdevries@rolandberger.com
Lorijn van der Spek

Lorijn van der Spek

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06.2021

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