The Real Deal

 Can Fonterra Prove Up?

The bureaucrats and tourism industry big-wallahs dreamed up a marketing slogan for New Zealand Inc: "One Hundred Percent Pure".  Wow.  That sounded good.  Perception is reality to narcissistic marketers.  So the slogan became a mantra.  It was a most stupid move.

The slogan could only be taken seriously if it were regarded as hyperbole.  If it were a mere exaggeration for effect, no-one could complain.  But as a statement of a literal standard one has to live up to it is an impossible millstone around the neck.  The brute reality is that no-one and nothing in this life is one hundred percent pure (whatever that might mean).  Experimental chemists, working in the cleanest laboratory environments able to be achieved, are not infrequently frustrated by impurities messing up experiments.  No "100% Pure" there.  And if not there, not anywhere.  Certainly not when it comes to agricultural products, such as milk. 

When it comes to the marketing slogan, "NZ--100% Pure" we are guilty of engaging in deceptive and misleading behaviour.  There will always be markets, customers, and general idiots to take the slogan as literal truth, not hyperbole.  We have created a rod for our own backs and our stupidity is justly punished every time the rod whips through the air.

Stupid slogans aside, it is worthwhile considering the broader context of the Fonterra botulism scandal.
  Fonterra is the largest dairy exporter in the world; our dairy products exports to China are just starting to ramp up.  The market and demand for what New Zealand agriculture produces right now is bottomless (hyperbole warning!).  Thus a risk of botulism in our baby infant formula products is serious indeed. 

But beyond all the hyper-ventilating some perspective is needed.  Moreover, good things can come from this, if it is handled properly--which is good news, because with the best will and checks and controls in the world, it will likely happen again, like aircraft crashes and accidents.  We live in a fallen world, after all.

Firstly, some perspective is provided by Willy Leferink (Federated Farmers Dairy chairperson):

Last Friday I sat down with my wife and planned our weekend. As we are about to be hit by that farming tsunami called calving, this picture of farming domesticity meant this past weekend was likely going to be my last of relative freedom until Boxing Day.

Then Federated Farmers communications team called me with the kind of bad news you don’t want early on a Saturday. A Fonterra media release indicated that in a batch of whey was the potential presence of a strain of Clostridium botulinum.

We need to remember that no one is sick and this recall stems from Fonterra's product testing. If you want, Fonterra blew the whistle on Fonterra. Another thing we need to remember is that the volume involved is a fraction of the 2.5 million tonnes Fonterra produces each year. When I mean fraction, the 38 tonnes involved represents 0.0015 percent. But just as a miss is as good as a mile, the tolerance for C botulinum is rightly zero.  Yet this also means 2,499,962 tonnes of Fonterra produced product is unaffected. Getting that message out is vital in order to get our dairy products moving again. . . .

We are here because of that single unsanitary pipe at Fonterra’s Hautapu factory. There will be a reckoning but now is not the time; the ‘who, what, why, when, where and how’ questions come later. Right now we owe it to our consumers here and abroad to give them facts and not speculation. We owe it to them to communicate truthfully and in a format they will understand.

Contrary to popular opinion most of those bags of powder you may see in the news are produced to specification. Fonterra is directly plugged into major global supply chains and this is why being open and transparent counts. While the presence of C botulinum is serious, what we do next, matters. No matter how tough it may seem, being unambiguous, frank and accessible need to be guiding principles in how we communicate.

This started Friday at midnight when Fonterra blew the whistle on itself. Now the most urgent thing is to remove uncertainty in the wider market place.  That means identifying the products and companies involved in the recall. Of the eight customers, we welcome that Nutricia Karicare, Coca-Cola, Danone, Wahaha Healthfood as well as the local animal feed business, NZ AgBiz, have all stood up. Good on them. We must ensure that our consumers, wherever they are, have easy access to all the facts and in a format and language they understand. If you are a consumer and have concerns then please call the consumer number likely listed on the tin, bottle or container you are holding.

This is why communication channels must be kept open for the Ministry for Primary Industries as the regulator, Fonterra as the processor and the companies who used WPC80. Our only priority must be food safety and the integrity of what we export. Integrity is communicating facts openly and transparently and this is thankfully happening.

Here is some even blunter perspective from a correspondent:

According to an industry expert, it is of such very low significance. The contamination is so low that it would only cause a problem if you left the made up formula in warm temperature for several days to in order to allow the botulism to grow. . . .Two out of ten formulations are affected.

And another,

Only for the good. If you take all of the hype away and cut to the chase:

1. In a week all the emotion will be out of it 
2. China can’t ban NZ milk products or this generation of babies will all die from malnutrition
3. New Zealand has taken a hit in favour of Holland, which is bad for us

Overall, we’re probably a bit ahead of the game.

What, then, are the good things which might come.  Above all else--and far better than the specious slogan "100% Pure"--integrity matters.  That is why Fonterra's whistleblowing upon itself is so important and necessary.  That is why taking serious action to recall possibly contaminated product is essential.  It is the only way to preserve trust and confidence in the brand and the product.  Done rightly and with integrity it will likely turn out to be the best marketing spend Fonterra has ever made.  

In 1982 some people in Chicago died as a result of taking a dose of Tylenol.  It seemed that a malicious cretin had tampered with bottles of Tylenol whilst still on shelves, lacing them with cyanide.  The manufacturing company could have said, "It's not our fault" and pressed on.  Johnson and Johnson did the opposite:

Johnson & Johnson distributed warnings to hospitals and distributors and halted Tylenol production and advertising. On October 5, 1982, it issued a nationwide recall of Tylenol products; an estimated 31 million bottles were in circulation, with a retail value of over US $100 million. The company also advertised in the national media for individuals not to consume any products that contained acetaminophen. When it was determined that only capsules were tampered with, Johnson & Johnson offered to exchange all Tylenol capsules already purchased by the public with solid tablets.

Whilst the harm was real, the actions of the company were widely commended:

The media gave Johnson & Johnson much positive coverage for its handling of the crisis; for example, an article in The Washington Post said, "Johnson & Johnson has effectively demonstrated how a major business ought to handle a disaster." The article further stated that "this is no Three Mile Island accident in which the company's response did more damage than the original incident," and applauded the company for being honest with the public. . . . While at the time of the scare the company's market share collapsed from thirty-five percent to eight percent, it rebounded in less than a year, a move credited to the company's prompt and aggressive reaction.

According to the NY Times:

But Johnson & Johnson's shareholders were hurt only briefly. In 1982, the stock, which had been trading near a 52-week high just before the tragedy, see-sawed in panic selling but recovered to its highs only two months later.  Investors have had little to complain about since then. If you had invested $1,000 in Johnson & Johnson shares on September 28, 1982, just before the first Tylenol episode, you would have $22,062 today, after four stock splits. The company has paid out increasing dividends for 39 years.

Johnson and Johnson became synonymous with integrity and trust.  Fonterra can do the same if it handles the crisis of potential botulism in the same way.  Early indications are positive.

Fonterra, along with all companies, needs top-notch quality controls, processes, testing regimes, and safety protocols.  But despite all these, crises will occur. Customer care, honesty and integrity--which is very much in the company's hands--will make far more impact and will build brand power far more than anything else. It is something that cannot be created, nor spun, nor carried by the vacuities of a marketing slogan.  Moreover, honesty and integrity cannot be bought: they have to be demonstrated.  Go to it.