Aug. 1 (Bloomberg) -- In early May, Unilever Chief Executive Officer Paul Polman paid a visit to the headquarters of its subsidiary Ben & Jerry’s in South Burlington, Vermont, meeting with about 100 employees to share his views on deforestation, farming, and food made with ingredients from genetically modified organisms.
That night, Polman had dinner and ice cream with Vermont Governor Peter Shumlin and Ben & Jerry’s CEO Jostein Solheim. Two days later, with Solheim at his side, Shumlin signed the nation’s first law requiring labeling of foods made with GMO ingredients.
Ben & Jerry’s support of the law -- a swirl of savvy public relations, financial backing, and grass-roots activism -- pits the ice cream maker against the world’s biggest food companies, including its own corporate parent. Unilever has openly opposed state efforts to legislate GMO labeling, throwing money into campaigns to defeat an initiative in California. But it has quietly allowed Ben & Jerry’s to assert itself as a vocal proponent of such laws, especially in Vermont.
“I don’t think they will ever want the potentially massive negative PR of trying to silence B&J,” said Andrew Wood, an analyst at Sanford C. Bernstein. Unilever shares slipped 1 percent at 2:16 p.m. in Amsterdam trading, dropping with European stocks.
If Unilever tries to play both sides of the issue, it may wind up hurting itself and Ben & Jerry’s. “In the short run, they might get away with ignoring what B&J is doing, but sooner or later it will catch up with them,” said Marion Nestle, a professor of nutrition and public health at New York University and the author of “Food Politics,” a book about how the food industry influences nutrition policy.
Unilever’s stance makes it “look stupid,” Nestle said, and it could open up the company to boycotts from consumer activists angry about its hypocrisy. “I suspect we will be hearing much more about this.”
The GMO labeling battle is heating up nationwide, with more than a dozen states considering legislation, including Oregon, which has a ballot initiative in November. A month after the Vermont law was signed, the Grocery Manufacturers Association (GMA) -- a food-industry trade group representing more than 300 companies, including Coca-Cola Co., Nestle SA, and Unilever -- sued Governor Shumlin and other state officials to block the labeling requirements, which take effect in July 2016.
In response to the lawsuit, the Organic Consumers Association, a Minnesota-based advocacy group, has renewed an earlier boycott of the “traitor” brands, as it calls them, whose parent companies are GMA members. Ben & Jerry’s, along with Kellogg Co.’s Kashi cereal and PepsiCo Inc.’s Naked Juice, is on OCA’s list of traitors. So far that hasn’t hurt Ben & Jerry’s sales, which rose 6.2 percent to $594 million in the U.S. for the 52 weeks ended June 15, according to data tracker IRI.
Rather than downplay the conflict with its British-Dutch corporate owner, Ben & Jerry’s has basked in it, donating about $5,000 to the state’s legal defense fund and pledging on its website to fight what it calls the “powerful corporate interests” who oppose “honesty in food.” Unilever says state labeling laws are costly and complex, echoing food-industry lobbyists who call GMO labeling a fad that violates free speech.
“If it’s a fad, then why have over 60 countries around the world adopted it?” Solheim asked. “I don’t think it’s a fad that people want to know what’s in their food. If you believe in a consumer’s right to know, you have to promote that belief. You can’t not take a stand.”
Ben & Jerry’s has never shied away from speaking out on social issues, and Unilever, since acquiring the company in 2000, has not interfered. Since 1985, Ben & Jerry’s has donated a portion of its profits to community projects across the U.S. In 1996, the company sued the city of Chicago and the state of Illinois for the right to label its products as free of recombinant bovine growth hormone, which is given to cows to boost milk production. A condition of Unilever’s acquisition was that Ben & Jerry’s would have a separate board of directors not chosen by its owner.
The maker of Chunky Monkey and Phish Food is not the only feel-good brand whose outspoken views might make its parent nervous. Organic beverage maker Honest Tea, owned by Coca-Cola, is, along with Ben & Jerry’s, a member of the “Just Label It” campaign, which advocates for mandatory GMO labeling nationwide. Honest Tea founder Seth Goldman, who declined to comment for this story, said in a 2012 blog post that “there are bound to be moments when our enterprise does not share all of the same ideas as our parent company. But there’s never been any pressure to compromise.”
Solheim, a Norwegian who joined Unilever in 1991 and became Ben & Jerry’s CEO in 2010, said Unilever respects the brand’s GMO labeling push, which included temporarily changing the name of one of its flavors to “Food Fight! Fudge Brownie.” He added, “Obviously, there have been some bumps in the road, but our relationship is very productive.”
One out of three consumers intentionally avoids genetically modified ingredients, up from 15 percent in 2007, according to the Hartman Group, a trend tracker. The U.S. Food and Drug Administration has rejected calls to mandate GMO labeling but allows foodmakers to volunteer on packaging whether foods don’t contain GMOs. More than five dozen countries require such labels.
Avoiding GMOs isn’t easy. More than 80 percent of the soybeans and corn grown in the U.S. in 2013 came from genetically engineered crops, according to the Department of Agriculture. About 75 percent of the foods Americans eat contain GMOs in some form.
Big foodmakers argue that GMOs are safe and reduce the price of food crops by as much as 30 percent. Most supporters of labeling don’t question the safety of GMOs -- the most influential regulatory agencies and organizations that study the safety of the U.S. food supply have found the ingredients to be safe. They say simply that consumers have a right to know what’s in their food.
Unilever says it opposes state-by-state labeling laws because it could require unique packaging for each state, complicating production and increasing costs, according to Unilever spokeswoman Anita Larsen. Those costs could get passed on to consumers. The GMA and other labeling opponents estimate that such laws could drive up a family’s annual food bill by as much as $500.
Voters rejected labeling in ballot initiatives in California in 2012 and in Washington in 2013. Unilever spent $467,100 to help defeat the California proposal, according to data on the Secretary of State’s website. It did not contribute to the Washington antilabeling campaign, according to the state’s Public Disclosure Commission. Unilever’s choice to stop funding antilabeling efforts was a business decision, Larsen said. But Ronnie Cummins, director of the OCA, said Unilever sat out the Washington initiative and has pulled back from its stance on the issue to avoid a backlash against Ben & Jerry’s.
Unilever sees no problem between its opposition to the laws and Ben & Jerry’s support for them, Larsen said. Ben & Jerry’s position on labeling long predates its acquisition, she said, Unilever does not oppose GMO labeling in countries that require it.
“It’s fascinating to see how Unilever deals with these two big competing interests,” said Paul Argenti, a professor of corporate communications at Dartmouth’s Tuck School of Business. “You have social responsibility and the demands of non-GMO advocates versus a business that is in operations across a variety of products, some of which cannot be as responsible as the others.”
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