retail news in context, analysis with attitude

The New York Times reports that while it does not surprise anyone that bioengineering companies such as Monsanto and DuPont are spending "are spending millions of dollars to fight a California ballot initiative aimed at requiring the labeling of genetically modified foods," it is somewhat surprising that "the companies behind some of the biggest organic brands in the country — Kashi, Cascadian Farm, Horizon Organic — also have joined the antilabeling effort, adding millions of dollars to defeat the initiative, known as Proposition 37.

"Their opposition stands in sharp contrast to smaller, independent organic companies, which generally favor labeling products that contain genetically modified organisms, or G.M.O.’s. And it has raised a consumer reaction on social media that has led some of the organic brands to try to distance themselves from their corporate parents ... The uproar highlights the difference between large organic brands that have driven the double-digit growth of the organic market and the smaller, independent businesses and farms that most shoppers envision when they buy an organic peach or shampoo ... Americans, however, are becoming much more aware of the role that food plays in their health and well-being, and consequently want much more information about what they eat, including whether it contains genetically engineered ingredients as well as salt and trans fats. So far, opponents of Proposition 37 have committed roughly $25 million to defeat it, with the largest contributions coming from Monsanto ($4.2 million) and DuPont ($4 million), which have made big investments in genetically engineered crops."

Proponents of the initiative are expected to spend roughly half that much to support it.

The Times notes that "although certified organic products are prohibited by law from containing genetically engineered ingredients, organic companies generally favor the labeling law, contending that consumers have a right to know what is in the products they buy. What is left unsaid is that it may also be a marketing advantage for organic companies, distinguishing them from conventional food producers."

The thing is, because Kashi is owned by Kellogg Co., Horizon is owned by Dean Foods, Stonyfield Farm is owned by Dannon, and J. M. Smucker Company owns a number of organic brands, there is a sense that some sort of struggle of conscience taking place - the bigger entities oppose the initiative while the organic subsets favor it, though in some cases even the companies that philosophically agree with Proposition 37 think that such regulation ought to take place at a national level, not on a state-by-state basis.

The Times reports that just this week, "Whole Foods, the retail mecca of the organic and natural foods movement, said it supported the California proposal, though with some reservations over the details - and without putting any money into the effort in accordance with its policy, a spokeswoman said."

California Grocers Association President Ronald K. Fong testified yesterday before a California Legislature Joint Informational Hearing, saying that if approved, Proposition 37 would create a litigation nightmare for grocery retailers. The initiative, he said, isn't "really about the ‘right to know,’ but is about the ‘right to sue.’ And when it is time to sue, grocery retailers will be on the front line."
KC's View:
I was chatting with a senior executive in a California chain yesterday, and this person told me that regardless of one how feels about Proposition 37, it remains an indisputable fact that people want to be able to better connect the food they eat to the sources of that food. This trend is only going to gain momentum, and it is a reality that companies need to accept and to which they must adapt.

I think it is fascinating to see how some organic companies are having to deal with the fact that their corporate owners may have priorities different from theirs; that sometimes is the price of having access to greater opportunities. And it strikes me as an entirely legitimate argument that such regulations need to be federal, not state-by-state.

But I also suspect that the people arguing for a national solution may, if they win this debate, will suggest down the road that the federal government has no business intruding in such a manner.