FRANCE/NZ: Danone to sue Fonterra over botulism recall
Danone has terminated its contract with Fonterra
Fonterra recalled concentrated whey powder last August over concerns some batches were contaminated with a bacteria that can cause botulism. While it transpired the recall was a false alarm, Danone, a customer of Fonterra, had been forced to recall products containing the ingredient in various markets, including China and New Zealand.
In October, Danone missed third-quarter sales expectations and lowered its full-year revenue and margin forecasts, blaming its recall of infant formula in Asia. Danone said its results were hit by the immediate impact of the recall and added the damage done to its reputation was also having a more lasting impact on sales.
Danone has estimated the recalls resulted in lost sales of EURE350m (US$476m).
The two companies had been engaged in dispute resolution talks, but have been unable to agree on the question of compensation.
In a statement today (9 January), Danone said it was terminating its supply contract with Fonterra. The company insisted the botulism recall showed "serious failings" in Fonterra'a quality standards.
"This affair illustrates serious failings on Fonterra's part in applying the quality standards required in the food industry. Danone is terminating its existing supply contract with Fonterra and making any further collaboration contingent on a commitment by its supplier to full transparency and compliance with the cutting-edge food safety procedures applied to all products supplied to Danone," the company said.
Fonterra insisted it will "vigorously defend any proceedings".
Danone SA - Strategy and SWOT Report, is a source of comprehensive company data and information. The report covers the company’s structure, operation, SWOT analysis, product and service offerings and ...
Fonterra is the world’s largest milk processer in the world, and in 2012 was ranked fourth in Rabobank’s Global Dairy Top 20. Fonterra has posted impressive half yearly results in 2013, showing a 33% ...
Danone is the number two French dairy company and it owes its status to a portfolio of world known and strong brands, including Danone and Activia. Danone is very well positioned to take advantage of ...
Fonterra is ranked in the top 21 among dairy players. However, this is due for the most part to its strong presence in Australasia. The company is looking to diversify, investing in a China-based dair...
- Deal or no deal: Frozen sale makes sense for Kerry
- Comment: Why Gardein is Pinnacle's ideal fodder
- Interview part 1: BRF CFO Augusto Ribeiro
- JBS sees big opportunity from Primo Smallgoods
- BRICs: The thinking behind Mondelez's Vietnam deal
- Danone, General Mills, Chobani "mislead parents"
- Kellogg trumps Abraaj bid for Bisco Misr
- United Biscuits UK plant to start strike action
- Wrigley opposes Perfetti Van Melle "WTF" TM
- Unilever makes European palm oil pledge