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October 6, 2014

Sri Lanka suspends sale of Fonterra products after complaints

Sri Lanka has suspended the sale of three batches of Fonterra's Anchor milk powder after complaints from customers.

By Dean Best

Sri Lanka has suspended the sale of three batches of Fonterra’s Anchor milk powder after complaints from customers.

The New Zealand dairy giant confirmed batches of 400g full cream powder had been “temporarily put on hold” after three customers complained. According to Reuters, several children in the village of Girandurukotte suffered food poisoning after eating the powder.

Dr Sanath Mahawithanage, associate director at Fonterra’s Sri Lankan arm, said the company’s testing procedures had found “no safety or quality issues”. The world’s largest dairy exporter is carrying out additional tests on the three batches.

Last year, Fonterra was hit with a ban on selling and advertising products in Sri Lanka after food safety regulators claimed they had detected the agricultural chemical DCD in milk powder. The company then faced a contempt of court charge amid allegations it continued to trade. Those claims prompted Fonterra to suspend its operations, although it reopened the business within a week.

The problems affected Fonterra’s sales in Sri Lanka, a key market in Asia for the business. The company saw its sales volumes rise 12% in Asia in the year to the end of July. Excluding the impact of the issues in Sri Lanka, volumes increased 18%.

However, announcing Fonterra’s annual results two weeks ago, CEO Theo Spierings said the company had seen its business in Sri Lanka recover.

“It had a massive impact,” Spierings said. “Our market share dropped significantly. Coming out of a crisis, your first focus is to get your market share back. We are back to 55% market share, which is really good.”

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