Whole Foods Ducks GE Labeling(A)

I’ll never forget my first visit to Whole Foods Market’s flagship store at its downtown headquarters in Austin, Texas. I thought I had died and gone to food heaven, one stocked with exotic cheeses, flavorful marinades, delectable prepared foods – all tastefully displayed and seemingly lit from within. I was prepared to move in.
Ten years later, I still shop at Whole Foods but a little crankily. It’s not that I’ve evolved beyond my weakness for beautiful foods beautifully displayed. The problem is my frustrating experience with Whole Foods as a consumer and shareholder advocate on the issue of labeling genetically engineered (GE) foods.
Three years ago, Trillium Asset Management filed a resolution at Whole Foods calling upon the company to specify on its private label product labels whether or not they contained GE ingredients. A no-brainer, we thought, since Whole Foods and its competitor Wild Oats’ had jointly announced in 2001 that their private label products were now sourced exclusively from non-GE crops. Wouldn’t a label be a marketing advantage to Whole Foods’ customers, who are obviously concerned about the naturalness of their foods? Whole Foods had even supported the Campaign to Label Genetically Engineered Foods with a couple of small grants.
Subsequent discussions with the company revealed that what looked like a no-brainer was in fact a conundrum. The Food and Drug Administration’s guidelines for labeling GE content were still in draft form, yet the agency had sent letters to natural foods manufacturers requesting that they rescind claims of being ‘GMO-free’ (GMO stands for genetically modified organism.). ‘Adventitious contamination’ of non-GE crops by pollen drift also concerned Whole Foods. No food company, even those that have gone to great lengths like Whole Foods to source from non-GE crops, can guarantee that its product is fully 100% free of GE ingredients. Several months earlier, the Wall Street Journal had run a “gotcha!”-style piece that identified the presence of GE ingredients in foods advertised to be GE-free. Whole Foods fears that companies that label make themselves vulnerable to lawsuits. A complicating factor was the uncertainty around how accurate tests for the presence of GE actually were. Whole Foods was jointly funding a study to address that question.
We argued that Whole Foods should apply a ‘non-GE’ label with a disclaimer noting the possibility of adventitious contamination, with no success. Still, we agreed to withdraw our resolution when Whole Foods agreed to strengthen its in-store and web site educational materials explaining their commitment to avoiding GE ingredients, address inconsistency between stores, and continue our dialogue on related matters.
Whole Foods has broken virtually every aspect of its agreements with our shareholder group. In-store education on GE issues has gone nowhere and a random sampling of Whole Foods employees in stores around the country revealed widespread ignorance about the company’s GE sourcing policies. The web site no longer links to the Campaign to Label Genetically Engineered Foods. We have received no written responses to our follow up letters. We were finally informed last May that Whole Foods wouldn’t even set timelines for these tasks because consumer education on GE ingredients was simply not a priority. The company has opted instead to promote the ‘organic’ label. This is fine as far as it goes, because ‘organic’ means, among other things, GE-avoidant. But customers will remain groping in the dark trying to figure out if Whole Foods’ non-organic private label products are GE-avoidant. (They are. But I’m usually not around to clear up customer confusion.) Remember, these products compete with others that have clearer labels.
Whole Foods’ “Core Values” document states: “We can generate greater appreciation and loyalty from all of our stakeholders by educating them about natural and organic foods, health, nutrition and the environment.” Our 2005 resolution reminds shareholders of that. (Full text is available at http://trilliuminvest.com.) You can also contact Whole Foods at their web site to urge them to be a leader in this area. If they don’t step forward, who will?