Nutricia: Botulism botch-up may cost jobs

Danone's Nutricia Karicare baby formula, one of the products recalled after the recent Fonterra contaminated whey scare.

New Zealand and Australian employees of infant formula manufacturer Nutricia could be the latest victims of Fonterra's botulism botch-up.

The Mt Wellington-based company says its overseas markets have been slow to recover from the scare and job losses are possible in a cost saving programme it has initiated.

The firm, which is the Australasian subsidiary of French food giant Danone, was hit hard by the August contamination debacle.

It was forced to recall 67,000 cans of its Karicare baby milk brand in New Zealand after Fonterra wrongly suspected that 38 tonnes of whey protein - used to make a range of products including infant formula manufactured by Nutricia - had been contaminated with a botulism-causing bacterium.

"All options are being considered to reduce costs which includes the possibility of reducing the workforce across Australian and New Zealand (ANZ) sites," the company said in a statement this afternoon. "Whilst there have been welcome indications of consumer confidence and trust returning to Nutricia, along with signs of recovery in the domestic market of New Zealand, overseas demand remains slow to respond. As a result, Nutricia ANZ has entered into a consultation process with a number of its employees regarding a proposed restructure of its ANZ operations."

Nutricia said it was committed to keeping any job losses to a minimum and where possible employees would be redeployed within Danone Group.

A Nutricia spokeswoman said no other details, such as how many job losses may occur, were being released.

While the company has not said which overseas markets were affected by the contamination scare, it is likely to have taken a heavy toll on Karicare sales in China, where consumers are highly sensitive to food safety scares.

Karicare has been sold through both official and unofficial channels in China.
Nutricia exports the brand to the Chinese market.

Additionally, a large amount of Karicare - purchased from New Zealand supermarkets - has also passed through Hong Kong's unofficial "grey channels" into China's loosely regulated online market.

But an industry source told the Business Herald that demand for New Zealand-made Karicare had "dried up" since the scare and some Auckland-based exporters involved in the unofficial trade had gone out of business.

Danone's Dumex infant formula brand was also recalled in China over botulism fears and the French company said last month that it had lost up to 350 million euro in sales as a result of the contamination debacle.

The Paris-based firm has said it wants "full compensation" from Fonterra for damages caused to its business during the recall.