Malcolm Moore: Fonterra chief feels the heat but keeps critics at bay

Fonterra chief executive Theo Spierings. Photo / AP

Opinion

"Phew, it's hot in here!" said Theo Spierings, the tall Dutchman who heads Fonterra, as he walked into his first public grilling on the company's latest safety problems.

Setting down a tiny notebook, he looked up to face a hotel conference room overflowing with around 300 Chinese journalists, many squatting on the floor metres away.

It did not start well. Even before the press conference began, Fonterra's Chinese representatives were handing out brown envelopes of cash, or "media allowances", for journalists at China's most important state-run outlets.

"It is not much money," said one representative, "Just for their travel expenses."

This is common practice in China, where companies have to persuade lowly paid hacks to attend their events. But Fonterra did not need to pay anyone to turn up yesterday. The scandal made the front pages of all the newspapers.

"I was not aware of this," frowned a Fonterra spokeswoman asked about the envelopes, before declining to comment.

Mr Spierings' task was to convince a Chinese market, which is already jittery about food safety, that it should not break into full-blown panic over Fonterra's problem.

Yesterday, supermarkets across China were busy stripping tins of infant formula linked to Fonterra off the shelves.

Over the weekend, stalls in Beijing's markets slashed the price of their Fonterra milk, hoping to dump their stocks before customers shunned them altogether.

So Mr Spierings began with an apology, aimed both at calming the public and at mollifying the Chinese government, which has blocked all imports of New Zealand whey protein and infant formula base powder until the situation stabilises.

"Parents have the right to know their infant formula is safe," he said, before sketching out the timeline of the crisis.

The contaminated whey protein was made on May 17 and 18, 2012, he said, and 20 tonnes were immediately shipped to six customers. At that point, he said, the product was "inside" its testing specifications. "We do not test for clostridium botulinum at that stage," he said. "We only test when we make semi-finished or finished products."

The remaining 18 tonnes stayed at Fonterra until March this year, when a plant in Darwin, Australia, began to process it into infant formula base powder. This is when the bacterium was identified, he said.

However, with more than 200 strains of clostridium in existence, it took four months to determine that the strain in the formula was potentially lethal.

"I only had the final results two days ago," he said. "I decided to immediately fly to China to share this with you."

Mr Spierings went on to list the products affected and to narrow down the problem to six batches of Dumex formula, made by Danone, that remain in the Chinese market.

All other products containing the strain had been rounded up, he said, and the offending Dumex batches would also soon be in their hands.

"We know where it is. In 48 hours we will have complete control over products containing this ingredient."

The media in China had already rooted out where the contaminated powder had ended up, confirming with Coca-Cola that 25kg went into Minute Maid juice, and also that 420 tonnes of contaminated Dumex powder had hit the market.

The scandal also allowed the Chinese government to attack the foreign brands that have recently dominated the market. However, the state media were careful not to mention the other huge scandal involving Fonterra: the 2008 baby milk horror, in which six infants died and 300,000 others fell ill after drinking formula produced by Fonterra's Chinese joint venture partner, Sanlu.

Fonterra allowed only three journalists to question Mr Spierings, and he handled them adroitly, fending off accusations that the company had dallied over releasing the news to the public and explaining that the factory that produced the contaminated batch had been shut down for seven weeks of cleaning and maintenance directly afterwards. "It was the end of the season," he said.

He suggested that the Chinese government would remove the "restriction" on whey protein and infant formula base as soon as the final report, given by Fonterra to the New Zealand government yesterday, reached the Chinese side.

But the company's reputation among Chinese families, desperate to protect their single children against harm, may take far longer to repair.

What products are safe?

* All infant formula products EXCEPT Karicare Stage 1 and Karicare Stage 2.
* Fresh dairy products such as milk, cheese and yoghurt.
* Frozen products such as icecream.
* Milk powder.

Getting advice

Healthline: 0800 611 116
Ministry for Primary Industries consumer helpline: 0800 693 721 or mpi.govt.nz
Plunketline: 0800 933 922
Nutricia customer careline: 0800 258 268.