30 August 2013
Fonterra’s false alarm shows danger of ‘crying wolf’
Victoria and Otago Marketing academics provide expert comment on the Fonterra crisis:
Although it is good news that Fonterra received the ‘all clear’ from the Ministry for Primary Industries yesterday, a
lot more needs to be done to restore New Zealand’s reputation, say academics from Victoria University of Wellington and
the University of Otago.
Dr Hongzhi Gao, Senior Lecturer in Marketing at Victoria Business School and Senior Research Fellow of the New Zealand
Contemporary China Research Centre, says the New Zealand government and business communities still have a big job ahead
to ensure the official findings filter through to the global market.
“Negativity was so widely spread overseas that a proper public relations campaign needs to be planned and implemented in
key dairy export markets, including China. If it is done well, the crisis may be turned into an opportunity for New
Zealand’s brand,” says Dr Gao.
Associate Professor Dr John Knight, Department of Marketing, University of Otago, says Fonterra is to be congratulated
for carrying out a precautionary recall.
“However, Fonterra needs to ask itself, how did this fiasco evolve in the way it did? With the benefit of hindsight,
what could have been done differently?
“If such an event occurs in future—and obviously we hope it doesn’t— Fonterra needs to avoid causing unnecessary
hysteria by only releasing accurate and verifiable information. For instance, the mention of a ‘dirty pipe’ conjured up
visions of unsanitary conditions and poor manufacturing standards—visions which could do lasting damage to New Zealand’s
reputation for having control standards as high as anywhere in the world.”
Dr Knight suggests that at the first hint anything was wrong in March this year, an initial cautionary recall should
have been carried out, notifying all channel members that products based on the contaminated whey ingredient were to be
embargoed while further tests were conducted.
“There was no need to mention unproven fears concerning the nature of the organism—they could have just mentioned that
there was suspected contamination by an organism that had the potential to cause illness. This should have been followed
up by rapid, extensive testing to determine the exact nature of the contamination.
“Sounding a strident alarm based on wrong information—essentially ‘crying wolf’—has the potential to weaken response to
a genuine crisis some time in the future.”
Dr Gao and Dr Knight have teamed up to study international crises, including the 2008 Chinese milk contamination crisis
where Fonterra lost its investment of over 100 million dollars in a joint venture with Sanlu.