MONEY

Companies begin embracing GMO labeling

Christopher Doering
cdoering@gannett.com

WASHINGTON — More food companies are voluntarily disclosing if their products contain genetically modified ingredients, the latest sign that consumer groups may be gaining ground in their campaign to get a nationwide mandatory label.

In just the past few weeks, candy-maker Mars, General Mills, Kellogg and ConAgra all announced they would be voluntarily labeling their products. They joined Campbell Soup, which became the first major food company to disclose the presence of genetically engineered organisms in January.

Food executives say they have no choice but to include the ingredients on labels, citing growing pressure from consumers to know what’s in their food, a failure by Congress to adopt a nationwide standard, and the fact that Vermont on July 1 becomes the first state to require labeling.

Those who follow the ongoing debate expect other food manufacturers to follow suit with their own labels or risk losing out in the fiercely competitive industry.

With these “companies starting to do it, it will create a real responsibility for other companies to start mentioning (them). They will have to start indicating where their ingredients come from,” said Sophie Ann Terrisse, a senior adviser with brand-management firm 26FIVE in New York. “They won’t have a choice.”

For food and consumer product companies, trust is paramount to keep and attract customers. It also plays a pivotal role in helping them distinguish their products from competitors, she said.

“This is all about this consumer discussion and creating trust for those brands. By communicating that they have GMO ingredients, it is about transparency. 'You can trust us. We’re going to tell you what's in our product,'" said Terrisse.

Companies that overhaul their label now, rather than wait, not only benefit by earning the trust of their customers, but they can potentially have a larger influence over how future state labels will look, food companies said.

Jolly Time has adopted GMO labeling for its popcorn.

By putting a label on their products that reflects the Vermont law, they increase the likelihood that other states will adopt a similar label. This lessens the chance that multiple state labels will be rolled out with varying requirements that can be costly for companies.

Scott Faber, Environmental Working Group's vice president for government affairs, said the decision by food giants to label their products indicates the "ground is shifting" and "time is running out" for Congress to act before the Vermont law takes effect. He said the new labels further squelch the argument that a mandatory label would lead to higher costs for food companies that they would pass on to consumers.

Jolly Time has adopted GMO labeling for its popcorn.

“We’re optimistic that Congress will find a national solution, and we’re thrilled that companies are willing to provide consumers with the basic facts and not waiting for Congress to act,” Faber said. "It's good news for consumers that they'll get the right to know."

Up to 80 percent of packaged foods contain ingredients that have been genetically modified, according to the food industry. Biotech crops are popular in agricultural states such as Iowa, where more than 90 percent of corn and soybeans come from the seeds.

'Consumer confusion'

The Vermont law requires packages to have the words “produced with” or “partially produced with” genetically engineered ingredients printed on the label. The requirement would only apply to products regulated by the Food and Drug Administration, meaning meat and poultry overseen by the Agriculture Department would not be covered.

In the case of Campbell Soup's SpaghettiOs, for example, the original variety handled by the FDA will need a label, but SpaghettiOs with meatballs, covered by the USDA, will be exempt.

”These two varieties sit next to each other on a store shelf, which is bound to create consumer confusion,” said Denise Morrison, Campbell’s chief executive, when the company introduced its GMO label.

Opponents of mandatory labeling have routinely touted a Corn Refiners Association study that estimated Vermont’s law could increase the price of groceries for families by nearly $1,050 a year. Consumers Union and other organizations said the corn group “drastically overstates” the impact, putting it closer to $2.30 per person annually.

Congress' inaction

Last month, the Senate failed to advance a bill banning states from establishing their own GMO labeling laws. It would have created a voluntary program where producers could put “smart labels” on their products that allow consumers to find out more nutrition and ingredient information online or by calling a toll-free number.

Sen. Pat Roberts, R-Kan., chairman of the Senate Agriculture Committee, failed to attract enough Democratic support by giving the food industry three years to bring 70 percent of its products into compliance or the Agriculture Department would be allowed to make the labeling requirement mandatory. He vowed to work on the bill when Congress returns this week from its spring break.

Sen. Chuck Grassley, R-Iowa, said he was not optimistic Congress could reach a deal before Vermont's law takes effect this summer.

“It’s going to be very difficult to get such a bipartisan agreement, and I wouldn’t be surprised that what you are going to find (is) some food companies that think the business for 600,000 people in Vermont is probably not worth it, and they’ll quit doing business there,” Grassley said.

Cost and trust issues

Herr Foods, a Pennsylvania producer of potato chips, pretzels and popcorn, is among those companies considering pulling its products from Vermont if the law goes into effect.

"It's a very big decision to make," said Bob Clark, Herr's vice president of marketing. "We have to consider everything because it's a very huge expense to" change labels across all our products to comply with the Vermont law.

Tracy Boever, director of public relations and marketing communications with Jolly Time in Sioux City, Ia., said the popcorn maker added a non-GMO label to its products two years ago because so many customers were calling to ask if their products had the ingredients. Unlike most corn, all popcorn is GMO-free.

The decision, she said, has been closely watched by shoppers and draws comments from people on social media who say Jolly Time is their favorite popcorn because it's non-GMO.

“At the store shelf when the consumer is making that decision and they see right on our package ‘Non GMO,’ I think that definitely helps” attract people to our brand, Boever said.

Campbell Soup, which also makes its namesake soups, V8 and Pepperidge Farm cookies, was the first to buck the rest of the industry by pushing for a mandatory national label. The food maker decided late last year to move forward with the label change following months of research and feedback from consumers, said Mark Alexander, a president with the company.

While Campbell Soup expects to incur some cost with new labels, many of which are already being shipped to supermarkets across the country, he said it’s not significant enough that it would have to hike prices.

“We believe that by being out front and by being the most transparent food company, that we will earn very strong levels of consumer trust, which will obviously benefit our business over time,” Alexander said. "We're not doing this out of legal compliance. We're doing this because we believe in the consumer's right to know."

'We can't wait any longer'

At General Mills, whose brands include Cheerios, Old El Paso and Chex, the company delayed work on other projects to focus attention on its GMO label. While the company still backs a national standard, it felt it had no choice but to make the change now.

“We can’t wait any longer with the Vermont law taking effect soon,” said Mike Siemienas, a spokesman with General Mills. “We made the decision to use the Vermont labeling everywhere in the country — not because we want to or because we think it’s a great tool to inform or educate consumers, but because a national standard doesn’t exist and we face fines if we don’t comply.”

A business failing to comply with the Vermont law would get hit with a $1,000 fine each day for every product that is not properly labeled.

Chad Hart, an Iowa State University agricultural economist, said food makers have been watching closely to see whether the Vermont law would be struck down by a court or whether Congress would pass legislation.

“They waited hoping action would happen somewhere else. It’s not necessarily cheap to change these labels,” he said. “With neither one of those looking like they’re going to happen anytime real soon, now companies are figuring out we’re going to have to deal with the Vermont law.”

The Grocery Manufacturers Association, which backs a voluntary law and opposes individual state laws they contend would be too costly, has challenged the Vermont measure in federal court. A request for a preliminary injunction to block the law was denied; the trade group has appealed.

“One small state’s law is setting labeling standards for consumers across the country,” said GMA, which represents food and beverage companies.

Contact Christopher Doering at cdoering@usatoday.com or reach him at Twitter: @cdoering