Following a recent audit of Beingmate's infant formula factory in Heilongjiang, the Chinese Food and Drug Administration (CFDA) announced that the firm’s infant formula products contained a DHA algae oil powder — akin to fish oil powder — which was "inconsistent with the material requirements of your company".
This led various major Chinese newspapers to caution mothers, especially considering the country's long history of food safety scandals, most notably the melamine scandal of 2008 that resulted in the death of six babies.
Fonterra has remained relatively tight-lipped on the controversy and chosen to adhere to its claim that the breach was merely a technical issue.
According to a spokesperson, the issue stemmed from Beingmate's regular supplier using an individual company standard on its product packaging, instead of the more trusted national food safety standard.
A statement to the press read: "No product was recalled or removed from shelves and no warning was issued to consumers by Chinese authorities.
"The audits carried out by the (Chinese) FDA are regular and mandatory for all infant formula manufacturers in China, including Beingmate, with approximately 100 audits already completed.
"The breach relates to a technical issue caused by the ingredient standard listed on the DHA packaging label from Beingmate's supplier being different to the standard noted in Beingmate's own documentation.
"The (Chinese) FDA publicly stated that no unsafe product was found in the National Supervision Programme, and all necessary corrective action was taken by Beingmate."
When contacted by NutraIngredients-Asia for comment, a Fonterra spokesperson declined to reveal more details, merely saying: "Fonterra is a minority shareholder in Beingmate. As an infant formula manufacturer, Beingmate is required to comply with China's strict regulations of the sector."
As to how this may affect the relationship between the two companies, the spokesperson replied: "Fonterra's senior management is working closely with Beingmate to ensure the business realises its potential."
Sharing the blame?
Fonterra has also said the issue was resolved on the same day it was raised, and a spokesman from the company has downplayed its involvement by citing that it owns "only" 18.8% of Beingmate's shares.
However, this makes Fonterra Beingmate's second largest shareholder, meaning it can be held liable for the latter’s financial losses and any food safety issues with its infant formula in China.
In fact, Fonterra chairman John Wilson said in February that Beingmate faced a "moderate to high risk" of being implicated in a food safety issue regarding infant formula in China.
In March, he admitted that Beingmate was having trouble fulfilling the stricter infant formula compliance standards implemented by Chinese authorities.