IT’S TIME for small dairy infant formula exporters to get over it.
It’s almost three months since Fonterra’s false botulism scare hit the headlines, but the small exporters are beginning to sound like an old record. Their catch phrase – “we are collateral damage”, frankly, doesn’t hold water any more.
Business, whether it involves selling food or toilet paper involves risk. Economic conditions, consumer demand, quality of product and brand and reputation in the market can either make or break your business.
This time last year, everyone was clamouring for the Chinese dairy market. Reports were rife of cartons of infant formula being swept off supermarket shelves and being sold through backdoor by retailers.
This was NZ Brand Inc in action. Propped up by New Zealand’s quality and clean-green image, everyone was jumping on the bandwagon of the lucrative Chinese market. One Auckland processor was packing 300,000 cans of infant formula a month for a range of small brands.
No one is taking anything away from these small and medium dairy exporters – they are astute businesspeople in their own right. However, their success in China has only been possible as a result of New Zealand’s great dairy reputation – fostered over the years by Fonterra.
When the dust settled on the false botulism scare, it became clear Fonterra wasn’t at fault. Agreed the co-op’s communications strategy left much to be desired, but blaming it for the demise of contracts and crash in sales is a bit over the top.
During the good days, everyone was happy to ride Fonterra’s coat tails and feed off New Zealand’s clean-green reputation. Now, everyone wants a slice of the co-op because their business has slumped.
Fonterra, the world’s fourth largest dairy producer, has its reputation to maintain. It’s not the co-op’s job to protect small exporters who have piggybacked on it into the Chinese market.
Every business has its risks. The Infant Formula Exporters Association should have had a crisis management plan in place to deal with road bumps in China. They haven’t been abandoned. The Government provided $2 million in travel grants for these companies to visit key markets as part of the rebuilding process.
However, blaming Fonterra and whingeing about the lost market doesn’t wash anymore and they must take greater responsibility. When the good days return, many will again be clamouring for a seat on the Fonterra bandwagon.