Fonterra should work with the New Zealand Government in a coordinated way to rectify the damage to New Zealand’s brand.
The current botulism scare is an issue that will have an impact far wider than just Fonterra.
Fonterra is our biggest exporter. It represents New Zealand in many markets around the world and trust in the safety of this country’s products has been compromised.
This crisis is a further blow to our ‘100% Pure’ positioning and the repercussions will take a long time to play out.
Fonterra Chief Executive Theo Spierings has done the right thing by jumping on a plane and heading to China, but the three-day delay in going public with the potential contamination of its milk products was a big mistake.
Emotional issues
One of the key things when dealing with a crisis like this is to understand the emotional dimensions of the situation. Where you are dealing with food safety issues and human health, and especially with babies, there is an emotional and a values-based side to it that needs to be taken into account.
With crisis communication, the best principle is to tell it all and tell it early.
In a vacuum, rumours and speculation abound and hence I welcome the urgency that Fonterra has now focused on this crisis.
But the Company does have some more explaining to do.
It is telling that Fonterra seems not to have learned some of the lessons from the 2008 ‘Sanlu Scandal,’ when the company, partially owned by Fonterra, produced infant formula containing melamine.
Fonterra was criticised after the crisis for being slow as well, forcing (the then Prime Minister) Helen Clark had to intervene.
It would have been nice to see the lesson about prompt communication being reflected in the way this current crisis was handled.
Inexplicable delay
If Fonterra had any concerns at all, not just low-level concerns, they should have taken action much sooner, including informing the government and their customers.
It is impossible, at this stage, to know the reasons for Fonterra’s delay in publicly announcing its problem. We cannot know what was going on inside Fonterra because they have not told us, but they may have felt this was something they could contain.
Were they over-confident in their ability to fix the problem and settle stakeholders down? Was there an unwillingness to admit there was a problem? Or was this just a slow internal process?
The problem, however, is that companies that sit on news of this nature tend to get punished by stakeholders who say, ‘We have a right to know.’
Despite the current challenges, I believe that Fonterra’s and New Zealand’s brands have not been damaged irretrievably.
Public apology
If it is confirmed that there is botulism contamination, I would be considering an appropriate apology. In a situation where people are stressed, angry or upset, they will not take in nuanced messages.
Therefore, Fonterra should send very simple and clear messages to its customers.
There is evidence that after the Sanlu scandal, Chinese consumers recovered confidence in milk producers, and over time, Fonterra will be able to do the same.
Consumers have long memories but it is possible over time to demonstrate change and regain trust. You cannot just turn up and say, ‘We are fine now; it is all good; it is safe.’ You need to show that you have taken the appropriate steps, and hence, it is both a communication and an operational response.
Trust is built on being trustworthy over time. From a reputation point of view, Fonterra needs to consider that for some of its stakeholders, this may be one crisis too many.
Dr Christopher Galloway is Senior Lecturer at the Massey University School of Communication, Journalism and Marketing, based in Albany, Auckland
