More people are getting sick and tired of not knowing what's in the food they eat. That's why there's been an explosion of organic food on supermarket shelves -- and outrage over "pink slime" in ground beef and the use of genetically modified ingredients without any notice to the buyer. You might dismiss organic food as not worth the money and think pink slime and GMO are just fine in what you eat. No matter what your position, as an investor you should be concerned about these controversies.
Take pink slime, a meat product made from leftovers and treated with chemicals that's often added to ground beef. Public concern over this additive mushroomed after an online petition was started to have it banned from school lunch programs. The backlash has hurt Cargill, the biggest U.S. beef processor, as well as Tyson Foods Inc. -- ground beef sales fell 11 percent in March to the smallest amount sold in that month in 10 years, according to a Bloomberg article.
Meanwhile, California residents have gotten 75 percent more signatures than necessary for a statewide referendum that would require genetically modified food to be labeled, says Bloomberg. GMO ingredients are in about 80 percent of processed foods, but most of the time the consumer doesn't know it. Monsanto Co. and other biotech food companies oppose the labeling, saying it will make people think they are eating unsafe food.
What's "safe" in food is debatable. What shouldn't be debatable is that people should be told what is in the food they eat and be able to make their own choice about whether they want to eat it. Food companies would be better off taking a proactive approach and educating consumers about any additives or processes that they deem safe but consumers wouldn't expect. If companies can't convince most consumers that ingredients or processes are safe and appealing, then maybe it's time to ditch them -- before the buyer ditches the company's products.
How companies try to head off controversy should be of keen interest to investors. Being open and providing information is better in the long run. Consumers, and shareholders, don't like surprises.