KEY POINTS:
In human terms the poisonous milk powder crisis in China is a terrible disaster but Fonterra now has to start counting the financial cost too.
Its 43 per cent-owned Chinese dairy company San Lu is one of 22 firms caught up in a scandal where the industrial chemical
melamine has apparently been added to watered-down milk to boost apparent protein levels.
The Government has shut down production at San Lu and all products have been recalled.
Counting the financial cost has rightly come second but when Fonterra announced its annual result this week it had little option but to name a price - and it's a high one.
Fonterra has written down its 43 per cent stake in San Lu, which it bought for US$107 million in 2006, by $139 million. What's left is worth only about $62 million.
Chief executive Andrew Ferrier says the San Lu brand cannot be re-constructed - in other words, it's finished. "That's why we took a write-off of the brand value, how you reconstruct the assets is the key," Ferrier says. "We haven't written off the assets because we think that there's going to be some way forward on that."
It's a safe bet the way forward will not be a quick rebranding and business as usual.
Fonterra will probably look to take at least joint control, perhaps even full ownership and this could set a pattern for future global growth.
It is too soon to judge the broader impact of the scandal on the Fonterra brand but the sequence of events poses some difficulties for the company.
Chinese State Council found San Lu discovered melamine in milk powder in June but did not report it to city officials until August 2 - the day Fonterra says the San Lu board was also told.
A trade recall started on August 6 and the Chinese began a public recall on September 11.
The question of why Fonterra did not go public earlier, with or without Chinese approval, is not going away.
Fonterra says it would have preferred an earlier public recall but decided it would have more influence if it worked within the Chinese system.
Chairman Henry van der Heyden said: "I think when people stand back and look at history on this one they're going to say that Fonterra had a positive impact on this whole event in the sense of we got mired up in it but ultimately this issue did get into the public domain and it's because we were there."
Chinese parents who fed poisonous formula to their babies during the six weeks between Fonterra being told of the crisis and a public recall starting may beg to differ.
How about an emergency plan to talk to your own Government on day one and perhaps leak it to the media to force any issue into the public?
Fonterra's handling of this crisis will end up as a case study for business students.
In the end they may be remembered as the New Zealand company that blew the whistle on the Chinese milk powder crisis - except they did it a bit late.