#France's Danone Faces More Heat in China

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Danone’s Nutricia unit said it «has immediately launched an internal investigation,» following new allegations that sales staff were bribing hospital staff to boost the sale of products.
The 21st Century Business Herald, a private Chinese publication, alleged that sales staff promoted Nutricia products by providing «improper» benefits, such as cash rebates, tourism and entertainment vouchers and other gifts to more than a 100 doctors at 14 Beijing hospitals.
The report, citing an anonymous tipster who provided the newspaper with documents, said Nutricia—which makes medical food for people suffering from illness but also some baby food products—allocated a budget to provide monthly payments to some doctors, and in one instance paid six doctors honorariums totaling 23,500 yuan, or roughly $3840. Between July 2010 and August 2013, Nutricia provided cash or gift incentives worth 300,000 yuan, or roughly $49,000, the report said. A spokeswoman for Danone declined to comment further.
Nutricia is the second Danone unit to launch an internal probe in China on bribery allegations in the past two weeks.
Last week, Danone’s baby food unit Dumex Baby Food Co. launched a probe of its infant-formula marketing following allegations by China’s state broadcaster that the formula maker pays hospital staff to use its products and influence sales. Danone said it was «shocked by the CCTV report.»
The recent bribery allegations follow on a major food safety scare this summer. Danone sales were hit after the company had to recall products in Asia following the warning by one of its major suppliers, Fonterra Co-Operative Group Ltd.,FCG.NZ -0.28% that some of its products may contain clostridium botulinum, a bacteria that can cause botulism. New Zealand’s government later found that the global recall of some of its dairy products was unnecessary.
«These bribery allegations don’t help, but the greater challenge is to restore consumer confidence in the baby-food brands,» said Charles Mills, an analyst with Credit Suisse. «It is all adding up to a series of unfortunate events for Danone.»
Credit Suisse estimates that Danone’s baby-food sales in Asia and China fell between 75% and 80% in August. The bank estimates that Chinese baby food accounts for about 4% of total group sales.
Strong demand for baby milk in China has helped Danone stem falling sales in Europe over recent quarters. In the second-quarter, Danone said organic baby-food sales rose 13.5%, driven mainly by China as mothers have turned to foreign-made baby milk since a 2008 baby-milk scare involving local dairy companies.
Danone, known also for its Activia yogurts and Evian water, has said that even though sales were hit in the third quarter by the Fonterra concern, the group will still meet its annual sales growth and margin targets.
Separately, Danone was also part of an antitrust probe in the baby-milk sector in China, which comes as China’s leaders are aiming to turn around the country’s dairy industry, which has floundered since 2008, when domestically produced milk powder tainted with an industrial chemical killed six infants and sickened 300,000 others.
China fined six dairy companies, including Danone, as a result of an investigation into anticompetitive practices in the baby food market. Danone, along with the other companies part of the probe, lowered the price for baby milk in China by as much as 20%.
Source: WSJ

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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