Editorial: Fonterra takes another hit

Just as Fonterra gears up for a potentially draining High Court battle with a French rival, another dark blob stains its bottle.

The giant New Zealand trader has issued a recall notice for nearly 9000 bottles of fresh cream because they have been contaminated with E.Coli - although retailers say much of it will have been sold and probably consumed already.

Both 300ml and 500ml bottles, under Anchor and Pams branding, are involved and they were distributed throughout much of the North Island with a best-before date of January 21.

The bacteria is found in faeces, causes food-poisoning-like symptoms, and has the sort of potent eeuw-yuck factor that no food company ever wants to be associated with.

On the plus side, the 8700 bottles represent a drop in a milk-maid's bucket for New Zealand's largest food company.

It could claim that it shows its testing and red alert procedures are appropriate and robust, and surely will be relieved this is a domestic issue only - even if it will most certainly have been noticed much further afield.

However, the company - which exports 95 per cent of its products - took two massive hits last year, and this week's incident has a here-we-go-again feel about it.

There was a baseless but damaging botulism scare last August which led to a major recall of infant formula products and, seven months earlier, concern over DCD fertiliser residues affected Chinese imports, even if they were ultimately shown to be within safe limits for human consumption.

China is a major buyer of New Zealand products but has been touchy since Fonterra was implicated in the melamine-tainted infant milk product scandal of six years ago.

Despite such glitches, New Zealand has long been trading on its clean product-high food safety record and consumers have been prepared to pay a premium for Fonterra products. Anything that brings its food safety measures into question can only be damaging.

Reputations are hard to gain and even more difficult to maintain.

No matter how minuscule the E.Coli incident might be in international terms, it will be milked for all it is worth by the company's major global trading rivals - particularly Danone, which seeks compensation through the High Court for alleged commercial damage from the botulism scare.

Danone, which owns the Nutricia brand, is said to be seeking up to NZ$489 million from Fonterra - which apparently only has put aside just $14m in the event of claims being made against it.

It is to be hoped that it can fight off the High Court claim - but no doubt some damaging mud will be flung should the case proceed. This latest incident will make efforts to restore its reputation that much more difficult.