Fresh trouble is brewing for several food companies including PepsiCo (PEP), General Mills (GIS) and the Kellogg Company (K). A study conducted by the advocacy collective, The Environmental Working Group (EWG), revealed that several breakfast foods produced by these companies contained the chemical glyphosate that is said to cause cancer.
Out of 29 oats-based products that were tested, only five came out safe. Of the remaining, Quaker products were in dangerous territory with high levels of glyphosate. Cheerios and Lucky Charms were part of the rogue gang, which also included a product from Kellogg’s. PepsiCo produces Quaker Oats while Cheerios and Lucky Charms come from the General Mills stable.
Glyphosate was in the news earlier this week. The chemical is a component in Monsanto’s weed killer product Roundup, which has multiple lawsuits stacked against it on the grounds that it is carcinogenic. Monsanto was slapped with a fine of nearly $300 million in a lawsuit filed by a former school groundsman who claimed its products led to his cancer.
At a time when food companies are tackling shifts in consumer preferences towards more healthy and organic options, having chemicals pop up in one’s products does not bode well, especially at harmful levels. Any product that poses risks for children immediately loses favor with customers.
The issue with Quaker Oats could lead to new problems for the parent company PepsiCo. During its most recent quarter, PepsiCo reported a 5% decline in Quaker Foods segment revenues. Companies like PepsiCo tend to attract more scrutiny due to their processed food products and snacks. General Mills saw a drop in profits for its most recent quarter with mixed results across its segments.
Monsanto is reportedly facing more than 2,000 cases related to its Roundup product and Bayer will inevitably be a part of this mess
The debate on glyphosate continues with the World Health Organization stating that the chemical was likely to cause cancer while the Environmental Protection Agency has said that glyphosate is not harmful if used in limited quantities. Some science advocates even argue that the attack on glyphosate is part of a strategy to promote organic foods. Monsanto continues to maintain that glyphosate does not cause cancer and that its products contain only the permissible quantity of the chemical.
Meanwhile, Bayer AG, which acquired Monsanto after a long struggle, might have reason to wonder what it has gotten itself into. Monsanto is reportedly facing more than 2,000 cases related to its Roundup product and Bayer will inevitably be a part of this mess. Bayer’s shares tanked following the recent lawsuit verdict, and it is yet to recover fully from the blow.
Bayer might decide to limit the sale of Roundup to only farmers which in turn would take a hit on its revenue. Bayer is facing additional problems with the possibility of restrictions on certain chemicals used in its pesticide products. This could further affect the company’s revenue streams. In conclusion, food and chemicals must never be mixed, but these recent events have stirred up a very unpleasant stew for companies from both sectors.
PepsiCo is down over 4% so far this year while General Mills has dropped around 21% year-to-date. The Kellogg Company is up more than 7% thus far this year.