Fonterra satisfied with Beingmate's response to labelling error
By Paul McBeth
June 21 (BusinessDesk) - Fonterra Cooperative Group is satisfied Beingmate Baby & Child Food is taking the right steps to deal with a labelling issue after getting caught out in a widespread audit by
Chinese regulatory authorities.
The world's biggest dairy exporter sought details from Beingmate after it was among a number of infant formula firms
found to have breached its licensing conditions. The issue was how Beingmate labelled its DHA algae oil powder
ingredient standard, which Chinese authorities said differed from Beingmate's own documentation. A Fonterra spokesman
stressed the issue wasn't a food safety problem, and that the cooperative was satisfied with Beingmate's steps to fix
the problem, which had been accepted by Chinese regulators the same day the notice was issued. No Fonterra product had
been mislabelled, he said.
"The audits carried out by the FDA are regular and mandatory for all infant formula manufacturers in China, including
Beingmate, with approximately 100 audits already completed," the spokesman said in an emailed statement. "The FDA
publicly stated that no unsafe product was found in the National Supervision Program and all necessary corrective action
was taken by Beingmate."
Chinese authorities have been taking a hard line over food safety since the 2008 melamine scandal, when Fonterra's
then-partner San-Lu added the chemical to artificially bolster protein levels in milk products, inadvertently killing
six infants and hospitalising more than 800 others. In the intervening decade, China has placed food safety under close
scrutiny, including tighter registration requirements for imports after the explosion of sales through unofficial online
channels known as the 'daigou' market.
Fonterra owns an 18.8 percent stake in Beingmate which it bought in 2015 for about $755 million as part of its plan to
break into China’s second- and third-tier cities, where the Kiwi company had limited exposure. The investment hasn’t
panned out as well as expected, with Beingmate reporting losses and Fonterra wrote down the stake by $405 million in the
first half of the current financial year, calling the performance “unacceptable”.
Beingmate was supposed to be the turning point for Fonterra’s Chinese plans, which have included developing farming hubs
in the world’s most populous nation, rebuilding its brand after the 2013 whey protein concentrate food scare.
Fonterra Shareholders Fund units rose 0.6 percent to $5.08 today, having dropped 21 percent so far this year.
(BusinessDesk)
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