Fonterra apologises to consumers

Fonterra chief executive Theo Spierings made his first apology on New Zealand soil over the infant formula contamination scandal today, as it emerged that four batches of potentially contaminated formula had reached Hong Kong and Australia.

The debacle kicked off on Saturday when Fonterra went public with news it had found the bacterium Clostridium botulinum, which can cause botulism, in three batches of a whey protein concentrate.

Fonterra's chief apologised to consumers and the New Zealand public at a press conference today, saying all contaminated stock had been contained.

Over the past few days Fonterra, regulatory authorities and Fonterra's eight customers have located and secured products that were not in the market, and where they had already reached retail shelves, initiated recalls, he said.

Mr Spierings made his comments after returning from a trip to China, and said after talks with Chinese authorities he was satisfied the situation there was stable.

All contaminated stock had been contained and there was now "little or no risk" for consumers, he said.

"Like I said in China, I do apologise to the consumers and to the public for the anxiety and distress that this has caused."

Asked if he would resign over the scare, Mr Spierings said: "That's not up to me, it's up to the board."

An internal investigation had started into the cause of the contamination, and an external investigation was also likely, he said.

"It's likely the Government will call for that as well ... and we welcome that."

At a Ministry for Primary Industries (MPI) press conference this afternoon, acting director general Scott Gallacher said two batches sent to Australia had been contained in a warehouse, while another two were released for distribution in Hong Kong.

He said a product recall had been issued and MPI were working with representatives in Hong Kong.

Questions were asked in Parliament today about the length of time taken by Fonterra to tell the Government about the contamination.

Fonterra had suspected the contamination since March this year and had gone about testing, but did not let MPI know until August 2, two days after the testing confirmed the contamination.

Mr Gallacher clarified the issue this afternoon by saying that MPI and AssureQuality, a commercial company fully owned by the Government, had found out on the same day.

Massey University researcher and marketing specialist Associate Professor Henry Chung said the Fonterra scandal could be a golden opportunity for the Chinese government to bolster the country's local manufacturers.

New Zealand's dairy products had long enjoyed a premium market position in China, and the country's growing middle class had been happy to pay the price for what it considered quality products, he said.

But he warned Fonterra was now in danger of losing its premium status.

"There is plenty of evidence to show that Chinese consumers are demanding higher quality products all the time."

Chinese consumers were sensitive to contamination of milk products and it would not be surprising if they started to look around to see what other product options they had, Dr Chung said.

"We have already seen the state-run media broadcasting many stories criticising New Zealand and the purity of its dairy products. I think they are working to position Chinese manufacturers as being just as safe and good as foreign suppliers."

If Fonterra wanted to minimise the impact of the crisis, they needed prove to Chinese consumers they had thoroughly reviewed their systems, and their procedures were now completely safe, Dr Chung said.

"If they can do that quickly, I think there is every chance they will continue to be considered a premium brand in China. But if this process takes too long or there are any further issues in the immediate future, then domestic manufacturers may gain a foothold."