Supermarkets Hold All the Cards in the Battle Over Grocery Labels

(Bloomberg) -- If you’ve shopped at a grocery store, you’re familiar with the barrage of labels on every surface. A single carton of Pete and Gerry’s Organic Eggs, for example, promises that it is: organic, from small family farms, Certified Humane, has no antibiotics or added hormones, and comes from free-range hens never given GMO feed. Some promises are redundant; hens laying organic eggs, for example, are never fed genetically modified organisms. All of them are confusing.

“It’s frustrating because we don’t have one encompassing, universally accepted U.S. Department of Agriculture rule that everybody understands,” said Jesse Laflamme, co-owner and chief executive of Pete and Gerry’s Organics. Currently, the organic rules have only minimal animal welfare requirements. Recent efforts to strengthen them were defeated by the Trump administration.

Now, animal welfare advocates are hoping supermarkets will help propel certifications such as Certified Humane into the same kind of success that organic—a $49.4 billion business with 6.4 percent growth in 2017, according to the Organic Trade Association—has experienced. 

They have reasons to be optimistic: From 40 percent to 50 percent of retailers carry products with third-party animal welfare certifications, according to a new report from the American Society for the Prevention of Cruelty to Animals and Technomic Inc., a food industry consulting company, that surveyed 300 senior supermarket employees. The vast majority reported that sales of these products have increased over the past three years, and 25 percent said they want to stock more. Technomic contends that the results mean there’s a real potential to replicate the success of the organic seal within a few years. 

Still, there’s a major impediment: Very few people understand what the labels mean. Some claims—like the ever-popular "natural"—mean nothing at all.

“These certifications are becoming so prolific,” said Meagan Nelson, associate director of Nielsen’s Fresh Growth and Strategy Team. “There’s noise for a lot of consumers.” 

Even retailers are confused. Though the survey respondents seem to understand some of the certifications and their differences—78 percent had a very good or somewhat good understanding of organic—store employees usually do not, said Wade Hanson, principal at Technomic. “The industry,” he said, “has to carve its way out of this mass of labels.”

The National Supermarket Association did not respond to request for comment.

The ASPCA argues the best way to do this is with the third-party verified animal welfare certifications. “We know that certifications are the solution to animal suffering and consumer confusion,” said Nancy Roulston, director of corporate engagement at the ASPCA farm-animal-welfare campaign.

Hanson sees an opportunity for retailers to set themselves apart from competitors by both carrying the right labels and educating consumers on their meaning. “At a time when supermarket traffic is a challenge,” said Hanson, “anytime you can establish a point of differentiation, that is a big, big deal.”

For Pete & Gerry’s eggs, the Certified Humane seal fills the gap the USDA left when it failed to raise organic’s standards, Laflamme said. “A stronger USDA standard with an animal welfare component would really negate the need for it.”

The ASPCA strongly supported those stricter rules. Now that those have been trashed, it’s pushing retailers to carry more third-party certified products. “I hope supermarkets will meet consumers where they are,” said Roulston, . “I’d like to see them take responsibility as gatekeepers.”

While everyone agrees that there’s a label-overcrowding problem, Mark Gale, chief executive of the food and agriculture marketing firm Charleston|Orwig, is skeptical about picking a winner. “There’s a lot of tumult in that whole area,” he said, referencing the current fracas over organic animal-welfare requirements as one example. “If anybody says ‘My standard is going to be the Standard,’ I think they’re just being hopeful.”

©2018 Bloomberg L.P.