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Taiwanese soft drinks industry braces itself for DEHP fallout

By Guy Montague-Jones, 21-Jun-2011

Related topics: Business, Food safety, Beverages

Sales of soft drinks in Taiwan could fall 20 per cent in 2011 after high numbers of products became contaminated with the plastics additive DEHP.

Big and small brands alike were hit by the contamination scandal as it was found that two major local food additive suppliers had added DEHP to a widely used clouding agent. DHEP is a potential carcinogen – prolonged exposure to which has been linked to fertility problems.

The immediate fallout has been significant. Taiwan has recalled nearly half a million bottles of sports drinks and fruit juices, and China has banned 948 products imported from the country. Other countries in the Asia-Pacific region have also introduced bans.

Commercial impact

The longer term commercial impact of the DEHP scandal in Taiwan is likely to become clearer in the coming months but initial estimates suggest it could be major.

“Industry sources estimate the island’s retail sales of soft drinks could fall by 20 per cent in 2011 compared to 2010, equating to a net loss of $540m,” said Euromonitor analyst Hope Lee.

And because Taiwan busily trades with its neighbours, other countries in the region could also be hit.

Lee told this publication: “It may affect soft drinks sales in China, Macau, Hong Kong – the Greater China region… The fact that the tainted products are from established brands/manufacturers made the situation worse.”

Food safety reform?

The scale of the DEHP crisis has raised questions about food safety in Taiwan and led to various suggestions for reform.

Lee said legislators have called for criminal punishment for those knowingly adding health-threatening substances to food. Other suggestions include compulsory reporting of DEHP and better mechanisms for food safety management.

But questions hang over the ability and willingness of the Taiwanese government to implement reforms.

Lee said: “Do they have enough resources to test new chemicals arising and help set up a better food safety mechanism given that the market is fragmented? Will manufacturers stick to the rules strictly when more paperwork/bureaucracy or costs are expected to grow given that lots of foods and beverages are seasonal?”