NZ has major task in recovering from Fonterra 'fiasco': academics

The New Zealand government and businesses have a major task ahead in rebuilding the country's international reputation, particularly in China, after dairy giant Fonterra's false alarm over a botulism scare this month, two senior marketing researchers said Friday.

"Negativity was so widely spread overseas that a proper public relations campaign needs to be planned and implemented in key dairy export markets, including China. If it is done well, the crisis may be turned into an opportunity for New Zealand's brand," Dr. Hongzhi Gao, senior lecturer in marketing at Victoria University Business School and senior research fellow of the New Zealand Contemporary China Research Centre, said in a statement.

Associate Professor Dr. John Knight, of the University of Otago marketing department, said Fonterra needed to ask itself how the " fiasco" evolved in the way it did and what could have been done differently to avoid "unnecessary hysteria."

"For instance, the mention of a 'dirty pipe' conjured up visions of unsanitary conditions and poor manufacturing standards, visions which could do lasting damage to New Zealand's reputation for having control standards as high as anywhere in the world," Knight said in the statement.

At the first hint anything was wrong in March this year, an initial cautionary recall should have been carried out, notifying all channel members that products based on the contaminated whey ingredient were to be embargoed while further tests were conducted, said Knight.

"This should have been followed up by rapid, extensive testing to determine the exact nature of the contamination," he said.

"Sounding a strident alarm based on wrong information, essentially crying wolf, has the potential to weaken response to a genuine crisis some time in the future."

Gao and Knight have teamed up to study international crises, including the 2008 Chinese milk contamination crisis where Fonterra was in a joint venture with Sanlu.

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New Zealand Contaminated Milk Scare