The controversial Genetically Modified Organism (GMO) labeling bill is now making its way to the President's desk. While the bill was drafted with consumer transparency in mind, allowing them the right to know what is IN the foods they eat, the foods and beverage companies are the real winners of this piece of legislation.
Under the bill, companies will now be required to display genetically-modified ingredients with words, pictures or a bar code that can be scanned with smartphones. Organizations such as the Center for Food Safety and the Non-GMO Project say that upwards of 75% of processed foods on supermarket shelves contain genetically engineered ingredients.
But even companies with GMO products are pleased the bill passed.
In a phone interview Thursday, Kroger's (KR) director of media relations, Keith Dailey, said the supermarket chain is supportive of the legislation and pleased that Congress has worked in a bipartisan way. "The bill establishes a common sense labeling standard and avoids a patchwork of inconsistent state laws that serve only to confuse our customers and drive up costs in the supply chain, which would ultimately lead to higher food prices for American families," said Dailey.
Even before the bill was passed, corporate food titan General Mills (GIS) had already begun label modification. Several of its products contain GMOs, like Betty Crocker frosting and Chex cereal. While the company may have spent millions fighting mandatory labels according to 2015 data compiled by the Environmental Working Group, it decided not to wait for a Congressional decision to begin labeling GMO products earlier this year.
"Vermont state law requires us to start labeling certain grocery store food packages that contain GMO ingredients or face significant fines," said COO Jeff Harmening in a March 2016 blog post, "We can't label our products for only one state without significantly driving up costs for our consumers and we simply cannot do that."
To help answer consumers' questions about GMOs, General Mills also added a search tool on its website to provide ingredient information for hundreds of its U.S. products. Some of its brands including Annie's, Cascadian Farm, Muir Glen and LARABAR are organic and non-GMO.
In a statement Wednesday, Kris Patton, Brand PR Manager for General Mills, said, "We look forward to reviewing the details and the ensuing regulations as they develop. Regarding our plans on future labeling, we will need to review the regulations once finalized, talk with our consumers on their preferences and develop our long-term plan."
Whole Foods Market (WFM) is another company that established its commitment to GMO transparency years ago. In 2013, the company said that by 2018 all products in the its U.S. and Canadian stores must be labeled to indicate if they contain GMOs. The company began working with all of its national suppliers to encourage the use of non-GMO feed. It also was working to provide verified non-GMO versions produce at "high-risk" for GMOs. Those "high-risk" produce being: sweet corn, Hawaiian papaya, zucchini, yellow summer squash and edamame (soy).
Meanwhile, companies known specifically for organic, non-genetically engineered foods will not be greatly affected by the legislation as they would not need to modify packaging to reflect GMO ingredients -- making them default winners of the GMO labeling bill. But some still gave money to the movement.
WhiteWave Foods (WWAV) and Hain Celestial (HAIN) have both publicly stated that they support GMO labeling. Hain Celestial issued a statement in March 2013 confirming its support of increased transparency in labeling of GMOs.
"As a leading natural and organic products company, 99% of our natural and certified organic food products are made from non-GMO ingredients, a standard we have met for some time," said Irwin Simon, CEO of Hain Celestial.
Action Alerts PLUS holding WhiteWave Foods is a "champion" of the non-GMO movement, saying it strongly supports transparency in labeling. The packaged food and beverage company said it has donated more than $1 million dollars to support the efforts.
Some of WhiteWave Foods brands are enrolled in or verified by the Non-GMO Project, such as Silk and So Delicious. Meanwhile, brands including Horizon, Wallaby and Earthbound Farm products are certified organic and the U.S. Department of Agriculture's National Organic Program prohibits the use of GMOs.
France's Danone (DANOY) announced last week plans to acquire WhiteWave for $56.25 per share in an all-cash deal, representing a total enterprise value of approximately $12.5 billion, including debt. Action Alerts PLUS director of research, Jack Mohr, has encouraged members to "take profits on WWAV in the absence of a counter-bid and to avoid getting greedy."
According to a Bloomberg report, if the President signs the bill, which is expected, many companies will have to undergo packaging modifications, but the cost to do so is not as great as some opponents of GMO labeling have argued. A study by ECONorthwest in 2014 found that "the median cost of labeling in the studies that provided relevant models was $2.30 per person per year."
So the food and beverage companies that worried about GMO labeling driving up foods costs should see the benefits of having a national labeling standard versus having to manufacture specific packaging for specific states. Furthermore, another study by the University of Vermont released in July 2015 found that consumers do not view GMO labels as negative "warnings." It looks like the food giants, the organic food companies and the consumers are all winners.