Say No To GMOs! - March 2005 (Whole Foods)

March 2005 Updates

Whole Foods Shareholder Resolution

to be voted on April 4, 2005

WHEREAS

Whole Foods Market was quoted in USA Today stating, 'There's an absolute anger among customers that foods are being genetically modified and they don't know what ingredients are in their foods' (Source: USA Today, 1/4/00);

In a survey conducted by the Food Policy Institute, less than half of those polled (45%) believed it safe to consume genetically engineered (GE) foods;

Our company's "Core Values" state: "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";

According to our company, as of October 2001, all manufacturers making private label products for Whole Foods are using ingredients derived from non-genetically engineered crops, yet this information is not directly indicated in the products' packaging or labels;

RESOLVED

Shareholders request that the Board of Directors adopt a policy to identify and label all Whole Foods private label products with respect to their presence or absence of genetically engineered (GE) ingredients within them, and to report to shareholders by October 2005 on progress toward this implementation.

SUPPORTING STATEMENT

The shareholders believe that by voluntarily stating on its private product labels that such products are GE-avoidant, Whole Foods can indeed "generate [the] greater appreciation and loyalty from all of our stakeholders" to which our Company's Core Values aspire. We believe that our company is failing to take advantage of a natural opportunity to enhance its market share, given consumer wariness of genetically engineered foods.

Whole Foods sells private label products, both organic and non-organic, that avoid GE ingredients. Our web site states, "Consumers can rest assured that the use of genetically modified organisms…are strictly prohibited throughout organic food production," but this information is missing from its organic private product labels and packaging. Additionally, our company's non-organic private label GE-avoidant products do not have labels or packaging indicating that they are non-GE.

We believe that the labels' silence on GE ingredients may confuse consumers, and obscures the admirable lengths to which our company has gone to exclude GE ingredients from all of its private label products, both organic and non-organic.

Other companies that indicate the absence of GE ingredients include Hain's, Amy's Kitchen, Nature's Path., and B&G Foods.

By failing to educate consumers on its GE-avoidant ingredient policy through labels and prominent in-store educational materials, Whole Foods is squandering what should be a natural marketing advantage.

Whole Foods

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2005 monthly news

RE: Shareholder Proposal on Whole Foods Market Proxy Statement (Item #5)

March 15, 2005

Dear Whole Foods Shareholder:

We, the undersigned investors, are the sponsors of a shareholder proposal (#5 on the ballot) at Whole Foods Markets (WFMI) in this year's proxy ballot that calls upon our company to:

[A]dopt a policy to identify and label all Whole Foods private label products with respect to the presence or absence of genetically engineered (GE) ingredients within them, and to report to shareholders by October 2005 on progress toward this implementation.

We are writing today to solicit your support for this proposal, which we believe is in shareholders' best interest. Our shareholder dialogue group has engaged with Whole Foods on this issue since 2001. Regrettably our discussions have been unproductive, and we concluded that we needed to file this resolution to bring broader attention to this issue. We believe this issue has potential to influence shareholder value.

Whole Foods is one of the very few companies in the food manufacturing and retailing sectors that is superbly positioned to meet consumer demand for labels that explicitly address genetically engineered (GE) ingredients. In October 2001, after years of preparation, Whole Foods announced that all manufacturers making private label products for Whole Foods are using ingredients derived from non-genetically engineered crops. This should be a tremendous marketing advantage to Whole Foods. Many Americans are wary of GE foods, and an overwhelming majority would like to see labeling.

As our resolution notes, a survey conducted by the Food Policy Institute found that less than half of those polled (45%) believed it safe to consume GE foods. Survey and focus group data from a 2004 study conducted by the Pew Initiative on Food and Biotechnology found that 27% believe GE foods are "basically unsafe."

These same consumers – and even those who are more comfortable with GE technology – want labeling. The Pew Initiative study states:

On labeling issues, the survey and focus groups confirmed prior findings that consumers by large majorities support the labeling of [GE] food (92%) and [GE] ingredients in processed foods (91%).

And yet incredibly, Whole Foods refuses to inform its customers of its GE-avoidant policies in places where consumers are likely to see them – that is, directly on product packaging or labels.

As shareholders, this makes no sense to us. Our company has taken great pains to ensure that all of the numerous manufacturers of its private label products will not source from GE seeds, or ingredients grown from GE seed. The fact that Whole Foods' private label brands do not contain products grown from GE foods should give our private label brands a distinct advantage over competitors' – if only the customer knew!

What about Whole Foods arguments against our resolution?

The Board of Directors has recommended a vote against our proposal for the following reasons, each of which we will examine in turn.

"The Food and Drug Administration (FDA) has not issued mandatory labeling requirements for GE-ingredient or non-GE ingredient foods nor have they determined a standardized testing protocol for the presence of ingredients that have been genetically engineered. Accordingly, it would be extremely difficult, as well as costly for us, or any other retailer or manufacturer, to provide customers with accurate and meaningful information about the GE status of products on the basis of speculation of future changes in legislation."

Our response:

Although labeling of genetically engineered foods is not required, it is allowed, and competitors are doing so. (For example, HEB, which competes with Whole Foods in Texas and Louisiana, now labels its Central Market All Natural private brand products with the following: "THIS PRODUCT WAS MADE FROM INGREDIENTS THAT WERE NOT GROWN FROM GENETICALLY MODIFIED SEED.") Whole Foods has already established a random testing system by independent laboratories using state of the art polymerase chain reaction (PCR) technology that can both detect and quantify the amount of GE ingredients, if present. Additionally, the company has already worked with suppliers to ensure that no ingredients in private label products contain products from crops grown from GE seeds. Therefore this would not add any additional costs to the company beyond design costs associated with adding text to a package label.

Many other food manufacturers such as Simply Organic, Walnut Acres, Hains, Amy's Kitchen and Natures' Path already list the absence of genetically engineered ingredients on all of their products. Amy's Kitchen has accepted the additional costs to labeling despite the fact Amy's Kitchen's revenues are significantly smaller.

By not labeling private brand products our company is missing out on an excellent opportunity to demonstrate its leadership in the food industry.
"We believe labeling our products "non-GE" would be misleading our customers. Even crops grown from non-GE seed can be exposed to some small levels of genetically engineered plant material. This can happen in the field through windborne pollen or during the shipping, storing and processing stages. Due to this adventitious contamination, there are very few foods that are truly 'GE free'."

We do not dispute the ever-present risk of adventitious contamination.

However, Whole Foods' rebuttal ignores the company's option to label its products 'GE-avoidant' rather than 'GE-free,' accompanied by a brief definition and disclaimer noting the possibility of adventitious contamination. Many consumers wish to purchase GE-avoidant foods knowing full well that they are not guaranteed to be entirely free of a small amount of contamination. While organic foods do offer a non-GE option for consumers, not all consumers can afford the price premium of organics. This means it is even more important that Whole Foods provide GE-avoidant labels directly on their non-organic private brand products as well, so these consumers can be empowered with GE-avoidant choices.
"As we have no current plans to implement labeling of out products with regards to their GE status, we do not intend to report to shareholders by October 2005 in this regard. Requiring the Company to provide a report on this issue would involve unnecessary expenditures of time and resources. As a publicly held company, we take very seriously our responsibility to communicate material information to our shareholders. We do not believe it is appropriate for any individual constituency or interest group to dictate how we should communicate with our shareholder community."

We believe that in the area of GE foods, Whole Foods can do a better job living up to its "Core Values" statement, which reads: "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." We believe that the costs of implementing our proposal would prove to be negligible when weighed against the benefits of clarity in GE labeling (including increased market share and goodwill). Labeling is the logical follow-up to the considerable resources Whole Foods has already invested in ensuring that suppliers source ingredients from non-GE seed stock.

This proposal has not been generated by an "individual constituency or interest group" aiming to "dictate" how the company should communicate with its shareholders. Our combined holdings in Whole Foods are over 200,000 shares currently worth approximately $21 million. We are shareholders seeking enhanced returns through the exploitation of a natural market advantage, soliciting your support through the democratic means of the proxy ballot.

Help us send a message to Whole Foods management by voting YES in support of Proposal No. 5.

Sincerely,

Shelley Alpern, Trillium Asset Management Corporation
Laurie Michalowski, General Board of Pension and Health Benefits of The United Methodist Church
Indigo Teiwes, Progressive Investment Management
Gerard Ras, The Granary Foundation
Beth Williamson, Green Century Capital Management, Inc.
Jennifer Clark, Austin, Texas

Letter in PDF format

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Top Ten Reasons Why Whole Foods Should Tell the Whole Truth

1. From the mouth of Whole Foods VP

The January 4, 2000 issue of USA Today quoted Margaret Wittenberg, vice president of Whole Foods as saying, "There is an absolute anger among customers that food are being genetically modified and they don't know what ingredients are in their foods."
2. Consumers have the right to know

As of August 1, 2001, Whole Foods Market Inc.'s position statement on Genetically Modified Organisms (GMOs) - The Consumer's Right to Know states: "Consumers simply have the right to choose for themselves between genetically engineered and non-genetically engineered products."
3. Consumers want labeling

Consumers want GE ingredients to be labeled so they can make an informed choice for personal, environmental and ethical reasons. Over a dozen polls in the U.S. have shown that 70-94% of people surveyed want genetically engineered foods to be labeled as such.
4. It's a Whole Foods Core Value

Acknowledging that one of Whole Foods' "Core Values" is to "educate consumers about natural and organic foods, health, nutrition and the environment" Whole Foods must ensure its products are labeled and that it is providing pamphlets in the stores and materials on its web site outlining the possible health and environmental risks associated with GE foods.
5. Labeling will protect people from food allergens

Genetic engineering may involve the transfer of new and unidentified proteins from one food to another. Often these genes have never been used in the food supply. According to the National Institutes of Health, four to eight percent of children and one to two percent of adults exhibit allergies to certain foods and building blocks of foods, mainly proteins.
6. Labeling will foster consumer awareness

Bioengineering companies have profited under secrecy. Agribusinesses have taken over our food supply without us knowing about it. Labeling can serve as an educational tool allowing customers to publicly debate the benefits and drawbacks of GE foods.
7. Monetary contributions are not enough

Although Whole Foods Market has contributed $10,000 or more to the Campaign to Label Genetically Engineered Foods, Whole Foods is still denying consumers a choice by not labeling GE ingredients in its own Whole Foods private label products.
8. Labeling efforts are already under way

Europe, Japan, Australia, New Zealand and many other nations are already labeling. The U.S. government already supports labeling of foods for caloric and fat content and the labeling of wines when sulfites are present, so why not identify products that do or do not contain GE ingredients?
9. Whole Foods says it can't, but Whole Foods can

Whole Foods says that it cannot label its products as GE free because of the unavailability of accurate testing and the economic risk of labeling products prior to an FDA ruling on acceptable language for labels. This has not stopped Hain's, Nature's Best and Amy's Kitchen from labeling their products as such.
10. Labeling will inform consumers - this in turn can have a significant impact on our environment

Despite early claims that the need for pesticides would decrease with the planting of GE seeds, pesticide use has actually increased. Pesticide use has been linked to soil and water contamination as well as numerous health factors. Genes from GE crops spread by bird, insect and wind, contaminating the natural gene pool. Gene contamination can also lead to the creation of "superweeds" weeds that can no longer be controlled by herbicides, thus further increasing the application of chemicals to our crops, soil and water.

Whole Foods Ducks GE Labeling

By Shelley Alpern
December 2004

Whole Foods Markets is one of the few food companies to have purged genetically engineered ingredients from its foods sources. So why don't its labels say so?

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://www.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?

http://www.trilliuminvest.com/pages/news/news_detail.asp?ArticleID=407&Status=CurrentIssue

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