Whole Foods' GMO Labels Are About to Change Grocery Shopping

Who would have thought that Walmart (WMT) would ever sell organic foods? But now they do, and you can thank Whole Foods (WFM) for that. Whole Foods sets the trends, and it's about to do it again with a new food-labeling initiative that may force other major retailers to follow suit.

Whole Foods announced on Friday that it is giving its suppliers five years to clearly label all products containing ingredients with genetic material that has been modified through genetic engineering, or Genetically Modified Organisms. Alternatively, suppliers have the option of sourcing only non-GMO ingredients. The company says this move is in response to consumer demand (as reflected by the growing sales of their existing non-GMO products) and grassroots political movements pushing for more transparent labeling.

Where Whole Food Goes, So Goes the Neighborhood

Whole Foods became the first national certified organic grocer in 2003 and flourished as it served high-income customers. Other major retailers saw that there it was profitable to offer organic food options that were clearly labeled as such.

In 2005, Safeway (SWY) introduced its own private-label organics line, called O Organics. In 2006, Walmart, Target (TGT), and Costco (COST) all introduced their own lines of organic products.

In turn, this broader demand motivated big brands like Kellogg (K) and Kraft (KRFT) to start developing organic versions of their most popular products in order to meet the grocers' new and growing demand for organic products.

Next Course, Hold the GMOs

If Whole Foods is right about the significant, growing consumer demand for non-GMO products, then we should expect to see a similar spread of non-GMO products in mainstream grocery stores.

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According to a recent poll conducted by Huffington Post and YouGov, 82 percent of Americans want GMO foods to be clearly labeled. Whole Foods President A.C. Gallo told The New York Times that some of their suppliers have seen sales increases of 15 percent in foods they have labeled.

While opponents of the initiative claim that GMO labels can mislead consumers by creating a false impression that GMO foods pose health risks, advocates claim that they do have the potential to pose a wide range of health risks -- everything from creating new allergens to causing humans to build up a resistance to antibiotics.

Advocates also worry that GMOs eliminate genetic diversity in our crops and put us in a position where the introduction of a new pathogen could destroy an entire food source. And some say that the FDA's claim that products containing GMOs are safe for consumption is based on inadequate testing -- and that many of the studies that conclude GMOs are safe have been conducted or funded by the very businesses that wish to market GMO products.

Whole Foods believes that these concerns are motivating a growing number of consumers to seek out GMO-free foods, and recognizes an opportunity to early grab market share among this group.

Do you think Whole Foods' contributions to the sustainable food movement are good for consumers? Chime in below.

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Motley Fool contributor M. Joy Hayes has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale and Whole Foods Market. The Motley Fool owns shares of Costco Wholesale and Whole Foods Market. Try any of our newsletter services free for 30 days.