More trouble for Japanese milk company

JAPAN – Milk giant Snow Brand Milk Products released a drastic restructuring plan on Tuesday.

The plan aims to help the company recover from a beef-labelling scandal at its Snow Brand Foods subsidiary in January.

Snow Brand Foods shares had collapsed about two-thirds and swerved up and down on Monday and Tuesday as investors tried to bag a bargain.
Snow Brand Milk said it might seek outside partners to take a stake in the food company and seek tie-ups in milk distribution. It rejected the idea of selling off Snow Brand Foods, the part of the company at the heart of the scandal. That means that the company’s main business, dairy produce, is being heavily affected.

It emerged in January that employees changed labels on beef to hide the fact it was from Hokkaido – where CJD has been found. They also labelled foreign beef as Japanese to get mad-cow subsidies from the government.

Major Japanese supermarkets have pulled Snow Brand Food products from their shelves and education boards in western Japan have stopped serving its products in school meals.

Last week, company president Shozo Yoshida resigned over the scandal. At the weekend, Japanese police raided the offices of Snow Brand Foods to collect evidence in their investigation of alleged fraud The company admits its employees acted illegally in the scandal. In a statement, Snow Brand Milk said: “We deeply apologize for the incidents of misconduct by Snow Brand Foods, which were pernicious legal violations that betrayed the trust of consumers.” The scandal comes after Snow Brand admitted last July that 16,000 of its ice bars might have been contaminated with calcium chloride.

In 2000, the company was responsible for Japan’s worst ever food poisoning incident, in which 14,000 people became ill after consuming products produced at Snow Brands’ dairy in western Osaka. Neglect of correct cleaning procedures was blamed for the contamination.