25 Apr Does the Vermont Act 120 herald a new nationwide standard for GMO labeling?
It increasingly looks as though the GMO labeling legislation for Vermont could unintentionally now start to set the de-facto standard for transparent labeling around genetically modified organisms (GMOs) in food.
The context for this is that on July 1 2016, a new food labeling requirement for all products made with GMOs will go into effect in Vermont. This will be the first law of its kind in the country and certainly one of the most controversial labeling requirements in recent memory.
The intent of the Vermont law is to provide visibility to consumers who want to know more about what they are buying and consuming.
However, critics (including some major food industry groups as well as federal regulatory agencies) say this legislation, and the subsequent creation of new product labels, is an unnecessary expense. They also argue that too much information could be confusing to customers and is unnecessary in this context as current GMO foods have passed safety tests and “aren’t likely to present risks for human health” according to the World Health Organization.
Vermont continues to win its battle against the food industry with its Act 120. What does this mean for the brand owners that do business in the State of Vermont? Come July, when the law takes effect, fines may be levied against CPG, private label brand owners and manufacturers that either purposefully or negligently permit improperly labeled products on the shelves of stores in Vermont.
An unexpected effect of this legislation is that Vermont, one of the least populated states in the union, is setting the nationwide standard for GMO labeling.
“We are noticing that a lot of manufacturers are putting the Vermont-mandated label on their packages nationwide,” said Mike Gruber, senior vice president for federal affairs with the Grocery Manufacturers Association. “The supply chain simply doesn’t allow them to create a Vermont-only supply chain. The Vermont mandate has become the national mandate for our industry.” Said another way, CPG manufacturers will be proactively providing visibility to consumers nationwide who want to know what they are buying and consuming.
What does this mean for the private brand industry?
Private brand labels must be in compliance by July 1 2016. If you have retail stores in the State of Vermont, your options are clear:
- Remove non-compliant product from the shelves (and risk lost sales)
- Choose not to comply and keep products on the shelves (and face risk of fines)
We’re working with a number of retailers collecting product and packaging information from private label suppliers to understand the scope of change within their private brand products as well as data collection from national brand suppliers to understand their ‘readiness’ for the new legislation.
For the rest of the industry, will the actions of CPG manufacturers impact your private brand’s reputation and value?
According to a recent study from FMI and IRI, consumer interest in GMOs remains high and GMO labeling is a big concern. Even though the debate on GMOs is ongoing, what’s clear is many consumers just want to exercise their ‘right to know’. With more CPG brands providing visibility through labeling and giving consumers the transparency that they’re demanding, does this create a competitive disadvantage for private label brands? Can private brand retailers move quickly and align themselves with this new national standard for labeling?
The consumer’s perceived ‘right to know’ influences their decision to purchase a brand. According to a recent FMI, GMA, Deloitte research report, an evolving set of consumer purchase drivers is substantially growing in importance. These evolving value drivers include:
- Health & wellness
- Social impact
- Transparency (an overarching driver)
As the deadline approaches it is apparent that some products (whether national brands or private brands) will be withdrawn from sale as the relevant teams work to understand the facts and re-label as required; no doubt an opportunity for the people who can move quick enough to fill the shelves with appropriately labeled alternatives.
The FMI research identified that roughly half of the sizeable number of consumers surveyed, say their purchase decisions are significantly influenced by these evolving drivers.
These evolving purchase drivers relate back to the consumer’s demand for the right to know more about products. There’s an opportunity here for private brands to align with the national brands on this new labeling standard, getting one step ahead of their private brand competitors.
However, besides gaining a competitive advantage, are you risking the reputation (and value) of your private label brand by not proactively labeling GMOs?
Whatever action you decide to take, the first step is to understand which products within your private brand portfolio contain GMOs and if/where packaging changes are required. To find out more about how to achieve this, take a look at our GMO labeling impact assessment offering or reach out to me via email or give me a call on +1 866 740 3895.