After a month of headlines surrounding Fonterra’s botulism recall it emerged today (28 August) that the company’s whey protein concentrate was not, in fact, contaminated with a bacteria that can cause botulism. Facing stringent criticism at home, including an inquiry by the New Zealand government, this might seem like “good news” for the dairy giant. However, this fresh revelation is likely to lead to further questions over whether Fonterra’s management overreacted to events – and why it took so long to get the all-clear. Katy Askew reports.
Fonterra CEO Theo Spierings, it would seem, is a cautious man.
The New Zealand dairy giant revealed today that a botulism scare, which sparked global recalls of products containing Fonterra’s whey protein concentrate, was a false alarm.
Fonterra’s WPC80 ingredient was given the all-clear in a barrage of tests commissioned by the New Zealand Ministry of Primary Industries. Rather than containing clostridium bolulinum, a bacteria that can cause the potentially life-threatening botulism, the MPI said the batch was actually contaminated with the milder clostridium sporogenes bacteria.
“There are no known food-safety issues associated with clostridium sporogenes, although at elevated levels certain strains may be associated with food spoilage,” the ministry said in a statement.
Fonterra’s chief executive expressed the company’s “relief” at the news. Speaking to reporters, Spierings conceded that “not many people” would have made the call to initiate a recall. However, he stood by the decision.
“For me, as Fonterra’s CEO and as a father of three children, I truly believe that in initiating the recall, we took the right decision and did the right thing at the most critical moment. Given the same circumstances, and with food safety always front of mind, I would do the same again,” Spierings insisted.
Fonterra explained that initial tests conducted by independent testing from Crown Research Institute, AgResearch, concluded that the WPC80 was contaminated with clostridium bolulinum. AgResearch is one of only two research facilities in New Zealand capable of carrying out testing for Clostridium botulinum, the company added.
“On the basis of the results we received from the AgResearch tests, we had no choice but to alert regulators and announce a global precautionary recall with our customers.”
Indeed, Fonterra’s response to the tests was comprehensive. Within the first 24 hours of being alerted to the issue, Fonterra had traced and contained the ingredient sent to six out of the eight customers who received it. The company had supplied the product to various food and drinks companies, including the likes of Danone, The Coca-Cola Co. and Chinese giant Wahaha.
The dairy giant was also speedy in its decision to inform the appropriate New Zealand authorities, effectively blowing its own whistle.
Spierings then flew out to China, one of the key markets impacted by the recall, in order to minimise the damage done to Fonterra’s reputation.
Nick Martin, SVP of Northern Europe at supply chain group Trace One, says full-transparency and a quick response are vital to protect the image of a brand in recall situations.
“Transparency is key for any retailer or supplier: for brand protection, consumer confidence and food safety,” Martin tells just-food.
“Retailers and manufacturers need to be able to quickly identify all impacted products and act to remove any impact to customers… Responsible retailing means being able to say with full confidence that swift action has been taken and ensure that the impact on consumers is minimised as much as possible.”
According to this assessment, Fonterra’s decision to launch a full and highly public recall of the “contaminated” WCP80 was appropriate and proportionate.
However, given the damage that the recall has done to the clean, green reputation of the New Zealand dairy industry as a whole, it is likely there are those who will beg to differ.
Fonterra’s recall placed the entire New Zealand dairy industry under the spotlight in key Asian markets.
The Chinese baby formula market alone is worth about NZ$2.7bn a year to New Zealand. And it is an area where consumers are highly-concerned over food safety issues given a number of high profile recalls and the 2008 melamine scare, which resulted in the deaths of six babies. Reputation is everything in this sector and Fonterra in particular – and New Zealand dairy products in general – have emerged from this scare tarnished.
The New Zealand government has already launched an inquiry into Fonterra’s management of the affair and, given the importance of the company to the wider health of the country’s economy, management will likely face ongoing questions over its response. Ironically, Fonterra could well go from facing criticism that its reaction was insufficient to the charge that the company’s response was over the top, almost panic-stricken.
The delay in receiving test results will also likely remain under the microscope. The batches of whey protein thought to be contaminated were produced in May 2012 and commentators had questioned why there was a 15-month lag between production and identifying the issue. Now, the company will likely face fresh interrogation over why it took so long to confirm that the ingredient was not, in fact, contaminated.
“It is astonishing that it has taken such a long period of time for Fonterra to confirm that the bacteria involved in the global contamination scare is not botulism,” Katharine Vickery, partner at global law firm Eversheds says.
According to Vickery, Fonterra will now likely face litigation from its customers. “Fonterra will no doubt now be facing litigation repercussions from businesses in the supply chain affected by product recalls and import bans,” she predicts.
In some ways, Fonterra was presented with a situation where it was damned if it did, damned if it didn’t. Had the company delayed issuing recalls and notifying authorities in order to confirm test results – and those results had come back positive – Fonterra could now be facing the far more serious charge of endangering consumers.
Ultimately, when it comes to issues of food safety, prudence is undoubtedly a virtue.