Fonterra’s Whey Blues
An Analysis of Fonterra’s Botulism Scare and Product Recalls
CS4033 Corporate Communications
This case was developed based on archival research with the sole
purpose for class discussion. It does not aim to serve as endorsements
or to be used as a source of primary data to illustrate managerial
practices of the organization(s) or individual(s) mentioned in the case.
This case aims to:
• Illustrate the importance of transparency and prompt
At the end of the discussion, you should be able to:
• Identify communication strategies used in times of crisis
• Analyze an organization's crisis situation
• Suggest improvements to ineffective communication
• Fonterra Co-operative Group Limited is a multinational cooperation owned by more than 10,000 New Zealand farmers.
• It is the world’s largest milk processor and dairy exporter.
• The company has, including their milk producers, over 16,000
people working to produce and refine their products
• Fonterra’s brand portfolio includes large and global brands
such as Anchor, a milk brand available in over 70 countries.
Start of the crisis
• Fonterra did a wide-scale recall of products in 2013. Fonterra
announced the recall after botulism-causing bacteria were
found during a safety tests.
• It only takes a small amount of bacteria to cause severe
poisoning, possibly leading to respiratory and muscular
problems in adults.
• Almost 1,000 tons of consumer products were affected by the
recall across seven countries.
Fonterra’s initial communication
• Fonterra announced the situation in a press release on 3
• Fonterra admitted that the batch of whey protein found to be
contaminated was made in May 2012.
• They also stated that the issue was found in March 2013, five
months before they made it public.
• Fonterra do not clarify what brands or products that can be
Media and public reactions
• The media criticized Fonterra for taking over a year to find out
about the deadly bacteria and warn the public.
• Fonterra faced great pressure announce the affected brands
• Angry parents react on social media:
“If people know what it is then they can get rid of it before
they use it, how dumb putting out warnings and people have
to guess what product is affected. Putting lives at risk keeping
this a secret”
Fonterra’s response to media
• Head of New Zealand Milk Products, Gary Romano, agreed to be
interviewed on New Zealand’s biggest news show on television,
• Gary Romano lied about which products were affected
• Mr Romano lied about having talked to the government about the
• He explained that his mistakes were “normal human ones”.
• Mr Romano resigned a couple of weeks later and the company’s CEO
apologized to the public for the ‘misunderstanding’.
• Fonterra reported revenue of US$18.6 billion and earnings of
US$1 billion before interest and tax, a decrease in 6% and 3%
respectively from the previous year.
• Countries such as China, Vietnam and Russia banned the
import of milk powder and whey protein from Fonterra after
• Danone, a French food giant that derives more than half of its
sales from dairy products, reported that the health scare has
delayed its sales growth strategy in Asia by half a year.
Government criticism and
• Prime Minister John Key voiced his disappointment with
Fonterra’s handling of the milk scare in a televised interview
• Mr Key also accused Fonterra of delaying the announcement
of the discovery
• The Ministry of Primary Industries (MPI) dispatched
employees to assist Fonterra with the containment of the
• The New Zealand government is conducting an ongoing
ministerial-level inquiry into Fonterra’s botulism scare.
Fonterra’s future plans
• A new Group Director of Food Safety and Quality will be
commissioned to provide better safeguards against future
• A full review of product quality standards and crisis
communication protocols will also be conducted.
• Confidential discussions have been ongoing between Fonterra
and Danone over compensation for the loss in revenue.
Identify and critique the response strategies used by Fonterra.
How did the use of these response strategies affect the outcome
of the crisis?
Suggest response strategies that could have alleviated the crisis.
How should Fonterra be prepared for similar situations in future?
Suggest ways to rebuild Fonterra’s brand image after this crisis.