Why Chipotle Investors Should Be Proud Today

Increasing numbers of consumers are concerned about genetically modified organisms, or GMOs, in their food. Forget about California's highly watched and narrow defeat of a GMO right-to-know proposition last fall, a defeat bankrolled by major companies like Monsanto as well as large consumer brands. Momentum is increasing at the state level, and even the biggest companies don't have endless resources to fight it.

Connecticut and Maine both recently passed labeling laws after California's well-known defeat on the contentious GMOs issue. Massachusetts is now contemplating a similar mandate. This is a major, growing problem for many consumer goods companies that are too busy wasting time and money fighting than on making an actual action plan.

Companies that get ahead of these issues and voluntarily acknowledge consumers' right to know deserve extra kudos. That's why Chipotle (NYSE: CMG  ) investors should be proud of the company today. As a shareholder who also bought shares of Chipotle for the Prosocial Portfolio I'm managing for Fool.com, I know I am.

No secret sauce here
Chipotle announced that it's disclosing which menu items contain genetically modified organisms on its website. Note that it didn't have to do this on an across-the-board basis, but it's voluntarily making that choice. Now consumers who want to know can know, and make their own decisions.

The unvarnished truth is that most of Chipotle's ingredients do contain GMOs. That's why its move is even more impressive. This could be easily misinterpreted, but it's not a sign of any inherent evil on Chipotle's part -- it simply underlines a fact about the American food supply that many might consider alarming. Unless a consumer is buying all organic, the cupboard is chock-full of GMOs.

The majority of crucial ingredients for so many foods, such as corn and soybeans, currently are genetically modified to resist pests and otherwise boost yields. The FDA does not deem these crops to be any different from the ones that are not genetically modified, and therefore, it never mandated labeling when GMOs started infiltrating American consumers' meals.

Although Chipotle's Food With Integrity plan is already admirable given the naturally raised, humane, local, and antibiotic-free ingredients it includes in its lineup as often as it can, those terms aren't defined as lacking genetic modification. The only guarantee of non-GMO consumption is the term "organic," and a full, immediate shift to such ingredients on such a large scale would be impossible for big companies at this point in time.

Honesty is the best policy
Chipotle is following in other highly evolved, customer-centric companies' footsteps. Earlier this year, Whole Foods Market (NASDAQ: WFM  ) made a huge stand by requiring its suppliers to disclose GMO ingredients by 2018. Needless to say, some of its biggest rivals would shudder at the thought of such an undertaking. Given the nature of Whole Foods' suppliers to begin with, though, the company was already way ahead of this curve, part of why management's vision continues to make the stock a stellar investment.

Another well-known consumer favorite, Unilever's (NYSE: UL  ) Ben & Jerry's, discloses GMO information on its website. Although most of its flavors lack GMOs, it is working to make its ice cream supply GMO-free. (Apparently, some of the chunks and swirls may have small traces.)

In my opinion, the beauty of these disclosures isn't about the science of GMOs. Investors can argue until the cows come home about whether they're safe or not. Many investors bring up some good points, including food scarcity and costs. The idea of more starving people in the world is not a pleasant one.

Beauty is truth; truth, beauty
The real point here is putting honesty and transparency first, in any area. The best thing corporations can do is make truth the priority, even if it's scary, threatening, or difficult to do. We need a lot more honesty and a lot less spin these days. If consumers demand information, it's wrong to basically say they don't need or deserve it.

It's time to demand the truth in all areas, not just business. I'm personally no fan of Monsanto, but tolerating or even encouraging outright disinformation is wrong. Some organizations and individuals clearly don't care as long as they get what they want. A recent meme about companies "owned" by Monsanto was ridiculous and irresponsible, and I simply had to debunk it. We should never put any agendas above the truth. Machiavellianism is an extremely negative trait, if we want to have conversations about evil.

Anyone who views Chipotle's decision as a business negative is dead wrong. The burrito slinger is choosing transparency when it could have gone with too many companies' usual response: sweeping reality under the rug and hoping nobody notices the alarming bulge beneath the Berber. It's letting the (tortilla) chips fall as they may, but that's actually a good business decision.

Chipotle's stock has been on an absolute tear since the company went public in 2006. Unfortunately, 2012 hasn't been kind to Chipotle's stock, as investors question whether its growth has come to an end. Fool analyst Jason Moser's premium research report analyzes the burrito maker's situation and answers the question investors are asking: Can Chipotle still grow? If you own or are considering owning shares in Chipotle, you'll want to click here now and get started! 


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  • Report this Comment On June 20, 2013, at 7:49 PM, csalerno wrote:

    It's comforting to know that there are some companies out there that are willing to change to make a difference, because they want to and not because they have to.

  • Report this Comment On June 20, 2013, at 8:51 PM, TMFLomax wrote:

    I totally agree! Voluntary action is always a great thing, and far more authentic IMHO.

    Alyce

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