Danone to sue New Zealand's Fonterra over baby milk scare

An investigation found Fonterra’s bacteria warning was a false alarm

French food giant Danone has set out plans to sue New Zealand dairy group Fonterra over a false warning that triggered baby milk recalls last summer.

Fonterra warned that some of its products had been infected by a botulism-causing bacteria, prompting Danone, which uses Fonterra ingredients in its Dumex and Karicare milk formulas, to issue recalls in nine countries including China. An investigation found Fonterra’s bacteria warning was a false alarm.

Actimel and Evian-owner Danone now says it is ending its contract with Fonterra as well as suing for compensation for lost sales.

Baby food accounts for a fifth of Danone’s revenue, second only to its dairy business. China is a key growth area for Danone amid slow demand in economically struggling Europe.

“This affair illustrates serious failings on Fonterra’s part in applying the quality standards required in the food industry,” Danone said. It previously claimed the recalls had hit sales to the tune of €350 million (£290 million). Fonterra said it “will vigorously defend any proceedings”.

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