Unfortunately, Spierings’ performance has been the only bright spot on Fonterra’s dial during the past two weeks. The Dutchman put up a courageous fight in China after the WPC80 crisis broke on August 3, but the damage had been done.
The co-op’s handling of the media and information sharing was a disaster. Keeping the chairman John Wilson away from the media for six days is mind-boggling. For six days the co-op’s owners and their chief representative, Wilson, had nothing to say as confused New Zealand mothers grappled with feeding their babies safe infant formula.
It’s hard to imagine how $360,000 worth of potentially contaminated whey protein concentrate can snowball into a global crisis, shutting our dairy products out of key markets and inflicting a deep wound on the country’s 100% pure branding.
Four inquiries are underway. Let’s hope, we’ll have answers on the five Ws- who, what, why, when and where? More importantly, the inquiries should not only steady the Fonterra ship but help re-open dairy shipping routes to precious markets by assuring consumers our products are safe.
For Fonterra, a better crisis management plan and team would be a good start. Spierings’ resignation, as demanded by some media commentators, isn’t the answer. The co-op needs the safe pair of hands Spierings has shown.
A successful Fonterra translates into a successful NZ Inc. The Fonterra share unit price has bounced back and the last GDT event recorded only a nominal drop in prices. For the time being the markets aren’t troubled by Fonterra’s botulism scare. However, patience is wearing thin among Chinese authorities.
If the Chinese apply the ‘three strikes and you’re out’ rule, then Fonterra is in trouble: Sanlu, DCD and now the WPC80 botulism scare. But Fonterra’s saving grace is that no one has fallen sick – so far. The product recall by affected infant formula and feed companies is almost complete.
The bottom line is Fonterra can ill afford another food scare. Spierings has centred his strategy refresh on China and Asian markets. The co-op’s much-heralded launch of its own infant formula brand in China later this year is also up in the air.
The co-op is at crossroads. It needs to win back credibility. It is clear Fonterra has not learnt the hard lessons from Sanlu and DCD scandals. This may be its last chance to get it right.
