Starbucks (Nasdaq: SBUX) is on a roll when it comes to altering some of its ingredients. The coffee giant recently began removing trans fats from its wares. Now, it says it's bowing to consumer demand by switching to milk that doesn't contain artificial growth hormones. It seems that sometimes, an item's absence can be a competitive advantage.
Thus far, Starbucks has arranged milk supply without artificial growth hormone in its stores in Northern California, New England, New Mexico, Montana, Oregon, Washington, Idaho, and Alaska. It plans to stop using milk containing the hormone in all of its company-owned stores, while working to block its use in licensed stores as well.
Artificial growth hormone, known as rBGH or rbST, is a genetically engineered substance made by biotech giant Monsanto (NYSE: MON) and trademarked under the name Posilac. Like many other genetically modified crops, proponents say it's safe for our food supply and leads to cheaper and more plentiful food. But critics aren't so sure, claiming that genetic modification may have health and environmental consequences of which we're not yet aware.
Scientists have found that milk from cows treated with the artificial growth hormone contains a different hormone linked to cancer in humans. Meanwhile, use of the artificial growth hormone has also proved harmful to the dairy cows themselves, leading to problems like udder inflammation (and increased use of antibiotics to treat such maladies).
Consumers' increased awareness of this issue -- and their rejection of milk produced using artificial growth hormone -- seems to have gained strength over the last year. For example, in September, two big dairies, Dean Foods (NYSE: DF) and H.P. Hood, began pressuring dairy cooperatives in New England to ensure a supply of milk that doesn't contain rBGH. Their efforts were prompted by consumers' increasing switch to organic dairy products. Removing the hormone doesn't make the milk organic -- it would have to meet other criteria as well -- but apparently, consumer concern about rBGH is considered a big factor in their switch to organic options.
I'm glad that Starbucks is making this move, even if dairy products that lack the artificial hormone command higher prices. I've started avoiding dairy products containing the artificial hormone, and it kind of frustrated me to think that the milk in my daily latte contained it. As a shareholder, I'm also glad to see Starbucks addressing this issue. Many Starbucks customers may not mind the substance in the least, but for those who vehemently oppose it, Starbucks' switch gives them reason to choose the java giant over rivals like Caribou (Nasdaq: CBOU), if only for the extra peace of mind.
For related Foolishness, see the following articles:
Starbucks is a
Motley Fool Stock Advisor
recommendation. To find out what other companies David and Tom Gardner have recommended for the service, click here for a 30-day free trial.
Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy.
Terms & Conditions
RSS Headlines
Fool UK