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Current as of 19/09/14 03:20PM NZST

Christopher Adams

The Business Herald’s markets and banking reporter.

Nutricia: We will bring back trust

Damage to brand not yet known, boss says, as rivals report boosted sales on back of infant formula recall.

Nutricia was focused on getting its product back on to supermarket shelves and giving reassurance to consumers, Managing Director Corine Tap said. Photo / Chris Gorman
Nutricia was focused on getting its product back on to supermarket shelves and giving reassurance to consumers, Managing Director Corine Tap said. Photo / Chris Gorman

Nutricia says it's still too early to say how badly its Karicare infant formula brand has been damaged by the Fonterra botulism contamination scare.

At a press conference in Auckland yesterday, managing director Corine Tap said she had listened in to calls concerned parents had been making to the Karicare information line and had been "gratified" by their comments.

Last week, the company recalled all Karicare Stage 1 new baby and Stage 2 Gold+ follow on formula in the New Zealand market over contamination fears.

The recall has now been narrowed to just those two products manufactured between May 21 and August 2 this year.

Nutricia, a division of French dairy giant Danone, was one of the companies that received 38 tonnes of whey protein, produced by Fonterra in May last year, that is suspected of being contaminated with a bacteria that can cause botulism.

Asked whether the Karicare brand had been hurt, Tap said: "I find that difficult to say at this point in time because our focus has been really on understanding the issue and clarifying it to mums and dads and carers."

Nutricia was focused on getting its product back on to supermarket shelves and giving reassurance to consumers, Tap said.

"I'm confident, based on what I've seen and read and heard myself over the last week, that we will bring back the trust."

Nutricia posted a revenue of $235 million and profit of $36.2 million in the 12 months to December 31, 2011, according to documents lodged with the Companies Office last month.

Karicare, according to media reports, commands a 72 per cent share of the infant formula market in this country.

But other brands have been finding some good in the scare.

Peak New Zealand said it sold 26,000 cans of its formula brand in a single day last week as local supermarkets rushed to refill shelves depleted by the recall.

And Gregg Wycherley, managing director of Auckland's Fresco Nutrition, said sales of his firm's Goat Gold Plus infant formula product had doubled in New World and Pak'n Save stores last week.

"I think we will retain a lot of those customers," Wycherley said.

"Some of them will go back to their regular brand but we hope to keep a lot of them."

University of Auckland senior marketing lecturer Mike Lee said Karicare's competitors could gain long-term customers as a result of the Fonterra crisis.

"Competing brands can jump on the bandwagon and try and position themselves in a chaotic environment."

Inquiries

Internal:
*Former Air New Zealand chief executive Ralph Norris will lead a Fonterra board inquiry into the botulism contamination scare, helped by former High Court judge Judith Potter and Chapman Tripp lawyer Jack Hodder QC.
*Fonterra will also carry out a separate, operational review of the crisis headed by its group director of strategy, Maury Leyland.

External:
*A Ministerial-level inquiry into the contamination will also take place, Prime Minister John Key confirmed last night.
*The Ministry for Primary Industries will also carry out an investigation.

- NZ Herald

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