Lactalis languishing in the dairy doldrums

Just a few short weeks ago it seemed as if Lactalis was well on its way to mopping up its metaphorical spilt milk; it had identified the source of the salmonella infection and had moved to recall all the affected products. No doubt there would be a period of damage limitation and a need to rebuild its public image, but generally there was a feeling that the worst was over. How wrong could one company be?

In the days that followed it seemed that every statement put out by the company indicated a worsening of the scenario, with an ever-widening number of products caught up in the net, until by 14 January it included all infant formula made at its Craon plant, regardless of the date it was manufactured.

On 16 January Lactalis said it will compensate every family which has suffered as a victim of salmonella contamination in its baby milk products. Currently more than 30 children are affected, although according to press reports more than a hundred families have filed lawsuits. While in financial terms this is unlikely to prove significant, that so many infants have fallen ill as a result of consuming its products will undoubtedly lead many consumers to shun any of its infant formulas, no matter where they may be made.

A political issue

The president of Lactalis publicly announced that the company stood by the effectiveness of the corporate procedures it followed throughout the recall. However, he would appear to be in a significant minority in holding this opinion and increasingly the management of the affair is being taken out of the hands of the company as it becomes a political issue.

Already the government has announced that there are to be sweeping changes in the way companies manage the results of internal safety tests. Currently a company is only obligated to report adverse results from their own checks if there is evidence that products are affected. Thus Lactalis was not required to report the discovery of traces of salmonella discovered in August and November.

In future this will no longer be the case, with food companies expected to report any adverse result at all. Moreover, the Ministry of Agriculture has also announced that there will be specific plans for controls on powdered milk products marketed for children, and these will be in place within three months.

Supply chain under the spotlight

But now it is not just Lactalis – or indeed food manufacturers in general – that is under the spotlight. The public was further shocked and dismayed to discover that a number of French grocers were still stocking formula that had been the subject of a previous recall.  French grocers including Leclerc, Carrefour and Systeme-U said some of the affected formula had ended up still being sold by its stores, but some of these at least have reportedly hit out at Lactalis, claiming the manufacturer was “not transparent from the beginning”.

Intermarche has subsequently decided to stop selling all products sold under the Milumel brand.  However, this has not stopped consumer groups from pointing out that the distributors as well as producers have a responsibility to ensure that the food products they market do not put the health of consumers at risk. It seems inevitable that the government will be looking closely at the role of the supply chain and seeing if their processes may also need to face closer regulatory scrutiny.

Lactalis recently announced that it will learn from the current crisis and introduce a strict sanitary control plan, emphasising that it will be working alongside authorities to ensure the best possible working practices. But will it be allowed to do so? Its reputation lies in tatters, with no sign that this will improve in the short term. And more worryingly for the nation’s infant formula producers, it is inevitable that some of the mud slung at Lactalis will stick to them as well.