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NZ weathered Fonterra storm, but can its reputation remain 100% Pure?

By RJ Whitehead , 19-Sep-2013

Warren Buffett famously once warned: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”

And as so often is the case when the Sage of Omaha makes a pronouncement, his words apply as much to wider aspects of life—public and private, corporate and governmental—as they do to business.

Now the dust has settled on the recent Fonterra botulism scare, New Zealanders can mop their brows and breathe a collective sigh of relief knowing that the impact of the affair could have been a lot worse. 

The results of a test that identified traces of an agent in Fonterra’s whey protein concentrate that might have caused cases of botulism in consumers turned out to be a false positive.

Industry and authorities worked together to prevent shipments from reaching their final destinations.

Top-level discussions between New Zealand and China distilled the spirit of trust between the two trading partners.

Nobody was harmed physically and the crisis was averted. A storm in a teacup. Time to move on.

This is the simplistic view that Fonterra and the New Zealand government would like to put forward because, like it or not, the two lead an uneasy, symbiotic relationship.

With the dairy giant accounting for around one-quarter of the country’s exports and a hefty chunk of its GDP, it holds a level of economic importance that is pretty much unheard of among public companies in the world’s developed economies.

Fonterra is tremendously beneficial for New Zealand when things are going to plan. But when there is even a whiff of a scare, the name Fonterra immediately becomes synonymous with its homeland.

So, in the wake of the botulism affair, things might now be calmer with lessons being learned, but still the pulses of a small army of Kiwi businesspeople will be far from resting.

This is for good reason. In tourism and in commerce, New Zealand has built a “100% Pure” brand that was designed to show the world that it could be trusted. 

On its farms and through its exports, 100% Pure suggests quality and values that many other nations have forgotten or just left behind during years of industrialisation. 

It is hard to argue against the success of a campaign that has created such a vivid image for the country. But it is fragile, and this worries Kiwi businesses.

For instance, executives at Taura Natural Ingredients were seriously worried as the Fonterra events played out. 

The 100% Pure New Zealand branding is very important for us, as it gives us a clean, green image, along with trust and consistent quality,” Natalie Hilterman, Taura’s Asia-Pacific marketing manager, told us at Vitafoods in Bangkok last week.

During the botulism scare, we were really concerned about the effect it would have on New Zealand’s image. Frankly, we were worried.”

As a BRC A facility, Taura must adhere to strict quality control procedures, with regular audits, something Hilterman team highlights to Taura’s Chinese clients in particular. 

Luckily for the company, it hasn’t felt any fall-out from Fonterra affair, but how many more hits like this can New Zealand as an exporter take to its image?

Aroma New Zealand, a family-owned producer of nutraceutical mussel extracts based in South Island, paints a picture of New Zealand as a country that is “inhabited by people with an innate connection to the land and sea. We are recognised for having a secluded, pristine environment surrounded by deep, pure waters.”

Ben G Winters, Aroma’s managing director, says this reputation must be upheld at all costs for wider Kiwi industry as New Zealand cannot withstand more crises.

What happened then was a farce, both by Fonterra and the government, and it could have done untold damage across New Zealand,” he raged.

We have earned our reputation for quality and purity the hard way, and it really does matter for hundreds of companies like us how New Zealand is seen in the export markets.”

Like Hilterman, Winters was deeply concerned as the Fonterra affair played out, and is now deeply bemused that a company of its size was able to find itself in such a perilous position in China.

Fonterra could have hurt us all,” he added.

As Warren Buffett warned, reputation is everything, and must be safeguarded. This is especially so in a small country like New Zealand, which punches above its weight on the world stage, but which also occupies a precarious position based largely on reputation.

With food safety one of the burning issues across the Asia-Pacific, New Zealand must make sure it never again falls on the wrong side of the headlines.

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