Food giant warns 441 jobs and $1b of exports at risk from infant formula labelling plan

Sunday, 21 July 2024

French multinational Danone has warned 441 jobs in Auckland and Otago and $1 billion in annual exports could be lost if the Government doesn’t block or secure changes to a trans-Tasman plan that would change the way infant formula can be labelled.

It is understood the issue, which will be discussed at a meeting between New Zealand and Australian food ministers on Thursday, has been high on the Government’s radar.

Food Standards Australia New Zealand (Fsanz), which is responsible for developing food standards for both Australia and New Zealand, has proposed stricter controls on the statements infant formula manufacturers can include on their packaging.

Manufacturers are already subject to a variety of rules that, for example, prevent them using images of infants or pictures that “idealise the use of infant formula” on their products.

But Danone’s Sydney-based director of legal compliance, Maria Venetoulis, said the new rules developed by Fsanz went further and would amount to a requirement to “white-label” infant formula in plain packaging.

Most of the infant formula Danone manufactures at its factory in Mangere, South Auckland is exported to China and South-East Asia.

But Venetoulis said all of its products that were labelled “made in New Zealand” needed to comply with local standards, including packaging rules, even if they were exported.

Existing labelling requirements were “pretty onerous” and already put New Zealand-made infant formula at a disadvantage in China and South-East Asia, while the new rules would make selling its products there “much harder”, she said.

Danone has been urging the Government to seek a review of the new Fsanz standard, warning Prime Minister Christopher Luxon earlier this month the company was deeply concerned about the impact it could have on its local operations.

“Sales restrictions and ‘plain packaging’ labelling may make our New Zealand operation and output economically unviable,” she said in a letter to Luxon.

“Danone may decide to cease or divert manufacturing for Southeast Asian and Chinese markets from New Zealand to one of its 22 other international sites.”

That would put “441 direct jobs across our sites in South Auckland, Newmarket and Balclutha at risk”, she said.

While some Danone executives were aware of the threat to its local operations, those concerns had not been flagged with its rank and file employees, she said.

“They are not aware of the risk at large.”

Food Minister Andrew Hoggard said he understood the infant formula industry saw aspects of Fsanz’ proposal as an additional regulatory burden in getting products to market.

“I have heard that feedback and am seeking further information from officials,” he said.

It is understood Hoggard is constrained by etiquette on the comments he can make ahead of Thursday’s ministerial meeting.

Issues involved in the use of infant formula continue to be the subject of a large volume of academic research.

An Australian-led study published in the Lancet last year cautioned formula milk sales were on the rise globally despite formula failing to offer the same nutrition, health, and developmental benefits as breastfeeding.

“To help promote market expansion, major dairy and commercial milk formula producing countries — especially the US, Australia, the EU and New Zealand — have advocated on behalf of these industries in international fora,” it said.

A Fsanz spokesperson said its goal was to protect public health and safety, and make sure consumers had access to information to make informed choices.

Its new infant formula standard, which runs to a mammoth 445 pages and deals with a variety of issues, had undergone “seven rounds of public consultation” with a total of 36 public reports released for comment, its spokesperson said.

“The proposal also involved eight independent risk assessments, five commissioned consumer research studies, four consumer literature reviews and two label surveys. Over 40 stakeholder workshops and targeted consultations were also held.”

A cost-benefit analysis concluded Australian and New Zealand infant formula products would continue to be competitive in international markets because of their strong reputation and high trust in the Australia and New Zealand regulations, they said.

“Updating the regulations maintains and strengthens this.”

The new regulations would not in Fsanz’s view go as far as white-labelling, its spokesperson appeared to indicate.

“The labelling regulations for infant formula products allow for products to be differentiated from each other using text, pictures and, or colour, while still allowing for core characteristics related to brand recognition.”

Venetoulis said Danone promoted breast-feeding as the primary way of feeding infants.

“Companies that are involved in infant formula manufacture adhere to very strict codes that prohibit altogether the marketing and promotion of infant formula.”

But the revised rules would in effect prohibit manufacturers from telling consumers about “innovations” and the advances Danone had made in its products, she said.

“Why would you make any advances to your products? If you cannot claim them on the pack?”

Danone has separate concerns about a Fsanz’ proposal that would require so-called “special medical purpose products for infants”, such as low-lactose infant formula, to only be sold in pharmacies.

The products were imported, but New Zealand was already a small market and the change could be expected to reduce access to those products and push up the cost for people who needed them, Venetoulis said.

“It's a really critical concern for us, with the consumer and care-giver in mind.”