N.G.A. Calls for FDA to Modify Menu Labeling Proposal to Exclude Supermarkets and Grocery Stores

ARLINGTON, VA, -- The National Grocers Association (N.G.A.) in public comments filed with the Food and Drug Administration (FDA) on July 5, 2011, strongly opposed the FDA's proposed rule for mandatory menu labeling that would include supermarkets and grocery stores as similar retail food establishments to restaurants. N.G.A. urged the FDA to adopt its proposed alternative/Option 2, which would only cover establishments whose primary business activity is the sale of restaurant or restaurant-type foods to consumers. The alternative/Option 2 that would exclude grocery stores is estimated to cost 12.5 percent less than the proposed FDA requirements and would only reduce the mandatory menu labeling coverage of restaurant or restaurant-type food sales by only 5 percent. This clearly demonstrates that consumers will still have 95 percent of the benefits if the scope of the rule is limited to businesses whose primary business activity is restaurants.

"We encourage the FDA to incorporate our suggested changes in determining the final regulations. The proposed rules would add significant costs and burden to food retailers, independent retailers in particular and with little benefit to consumers," said Tom Wenning, Executive Vice President and General Counsel of N.G.A. "There is no rational basis for considering independent food retailers to be part of a chain just because they may operate under a common banner name. The proposed rule is flawed in that it indicates that a chain should be covered regardless of the type of ownership of the individual locations. Independent retailers own, control and operate their stores independently; choosing what products are sold, how they are presented and prepared for food displays."

Some highlights of the N.G.A. comments include:

The proposed rule for "restaurants and similar retail food establishments" would include grocery stores because FDA covers establishments if (a) greater than 50 percent of a retail establishment's gross sales floor area is used for the preparation, purchase, service, consumption or storage of food." N.G.A. recommended a more reasonable definition of "restaurants and similar retail food establishments" to only include an establishment whose primary business activity is the sale of restaurant or restaurant-type food to consumers as opposed to food in general. All of the packaged food sold in grocery stores are already pre-labeled and regulated by FDA, and all single ingredient and ground and chopped meat and poultry products are required to be labeled and regulated by FSIS, effective January 1, 2012. Seafood, and fresh fruits and vegetables also have nutritional labeling as prescribed. Creating more regulations on food labeling for the limited restaurant type foods, if any, in grocery stores is very costly and would only affect a small portion of food sold and would not be effective.

N.G.A. also strongly opposed adverse effects on independent retailers served by cooperatives and voluntary wholesalers because the proposed rule indicates that a "chain" of 20 or more establishments should be covered regardless of the type of ownership of the individual locations and if operating under the same name. Independent retailers own, control, and operate their stores independently as members of cooperatives and customers of voluntary wholesalers who supply them with food and non-food products. The food distribution system allows independent retailers to take advantage of economies of scale when procuring goods and services as well as marketing and advertising, helping independent operators effectively compete with large national chain stores. Store set-ups, product mix, and menu offerings vary from store to store. N.G.A. said that FDA by no means should consider these retailers a chain or single corporate entity covered by the rule because they operate under the same name or banner. Their store operations are independently different and controlled when it comes to the presentation and preparation for food displays.

In addition, N.G.A. stated independent grocers will be disproportionately affected if grocery stores are included in the rule just because they sell "food", or that the primary business as proposed is based upon 50 percent of the gross floor area or sales being "food". If the law does not cover superstores, it must not cover grocery stores either. The alternative/Option 2 levels the regulatory playing field by using a primary business standard based upon 50 percent of gross floor area used for restaurant or restaurant-type food, or 50 percent of the establishment's revenues are generated by the sale of restaurant or restaurant-type food. Superstores will have an unfair advantage because so much more of their floor space and sales are dedicated to non-food items while they sell significant volumes of food. Under the proposed rule, supermarkets are placed at a severe competitive and regulatory disadvantage and will be forced to spend millions of dollars to comply while supercenters do not.