Danone has confirmed that it is seeking around €200m ($270m) in compensation from Fonterra to cover the costs associated with the infant formula product recalls it ordered in response to the New Zealand-based dairy exporter's recent whey protein concentrate (WPC) botulism scare.
Speaking with DairyReporter.com, Danone confirmed that it is seeking compensation of around €200m from Fonterra. The Paris-based company said in its emailed statement that this figure “represents an estimation of the immediate costs caused by the recall initiated in August in eight markets.”
On 2 August 2013, Fonterra issued a food safety alert to eight customers, including Danone-owned Dumex and Nutricia Australia New Zealand (Nutricia ANZ), over concerns that three batches of WPC potentially contaminated with botulism-causing Clostridium botulinum had entered the supply chain.
Despite no evidence that their products were tainted, Nutricia ANZ pulled 67,000 units of its Karicare brand infant formula from shelves in New Zealand, and Dumex initiated product recalls in Cambodia, Thailand, Hong Kong, China, Malaysia, and Singapore.
Additional testing has since revealed that the bacteria found in the three affected WPC batches were not Clostridium botulinum but Clostridium sporogenes – a non-toxic Clostridium strain.
"Determined" to be full compensated
Responding to media reports, Fonterra confirmed last week that it had entered into a “dispute resolution process” with Danone in regards to its August 2013 precautionary WPC recall.
While admitting that the payment of compensation to Danone over the false alarm is on the table, Fonterra has denied that it has “any legal liability” to the French dairy giant.
Commenting on its on-going negotiations with Fonterra, Danone said that it hopes to come to an “amicable” agreement with its supplier.
“Following Fonterra’s statement, Danone confirms having sent a notice of dispute to Fonterra on September 24 to give both parties a chance to reach an amicable agreement prior to any litigation, as Danone is determined that should be fully compensated for damages caused by the recall on eight markets,” said the statement from Danone.
“For Danone food safety is a non-negotiable prerequisite and we are actively collaborating with local authorities and key stakeholders to determine the causes of the situation and clarify responsibilities.”
“Our aim is to measure the global impact on Danone’s brand equity and on our ability to do business in a sustainable manner. We have an absolute responsibility to consumers to ensure that these events never happen again,” the statement added.