LACTALI’S PRODUCT

RECALL
PRESENTED TO: PROF. TANIA SHAW

PRESENTED BY: GROUP 2

18BSP0526- KAVITA GOPAL

18BSP0486- JEETENDRA AGARWAL
18BSP0510- KARAN RAI
 INTRODUCTION

 On December 21, 2017, France’s Directorate-General for Health (DGH) reported

that more 18 children had been hospitalized in the country due to salmonella
poisoning.
 Lactalis on government orders then recalled all the baby milk powder manufactured
at its affected factory in Craon in the north-west of France from all over the world –
regardless of its production date.
 It was Lactalis’ third product recall in a month, in which it withdrew 720 batches of
baby milk powder and infant cereals offered under various brands
 In total, 12 million baby milk powder boxes weighing around 7,000 tonnes were
recalled from 83 countries.
 During the month of December, 38 children had fallen ill in France, Spain (one
child), and Greece (one child), after consuming Lactalis’ products.
 Although all the children made a complete recovery over a period of time, the
parents were up in arms over the incident.
 PROBLEM STATEMENT

 12 million baby milk powder boxes weighing around 7000 tonnes were
recalled from 83 countries – in the 3 recalls – making it the biggest product
recall in the history of Lactalis

 Contamination of baby milk powder at their Craon factory in the north-west of

France

 Huge multinational company allowed to operate above the law and ethics with
weaker health and safety plan
 WEEKNESSES
STRENGTHS Falling revenues from dairy business
Strong Brand Corporate lapses and regulatory gaps
Strong capability to differentiate Limited presence in microwave and quick
cooking products
Excellent relationships with retailers
Complications in new recipe
Leadership in different segments
development
R&D innovation and research
Relatively lower diversification vs
competitors
SWOT
ANALYSIS
OPPORTUNITES
THREATS
Increasing demand for ready and frozen
meals Sensitivity to weather conditions
Increasing focus on its pasta and rice Growing sales of private label products
business Contamination of the global rice supply
Changing trends Strict health and safety plan
Unexplored geographies and markets e.g Brand reputation at risk
Prabhat Dairy
 SITUATIONAL ANALYSIS- PREVIOUS
RECALL
• The Directorate-General of Health (DGH) found 20 cases of SALMONELLA
poisoning among French children on 1st December, 2017
• The DGH inspected Lactalis’ Craon factory and found two drying towers filled
with Salmonella
• FIRST RECALL
• 2nd December, 2017 – 12 batches of baby milk power – From France
• Company circulated 24-hour helpline number
• Free doctor consultation
• SECOND RECALL
• 12th December, 2017 – 625 batches – From 30 countries
• Precautionary measure
• Products banned for export
 FINAL RECALL

• Recalled on 21st December, 2017

• The DGH reported further 18 cases of Salmonella poisoning
• Total 38 in the month of December
• Recalled 720 batches of baby milk powder from 83 countries manufactured at
its affected factory in Craon regardless of its production date
• Biggest product recall in the history of Lactalis
 ROOT OF THE PROBLEM & THE
BLAME GAME
• The CEO of Lactalis, Emmanuel Besnier was known as the ‘Invisible
Billionaire’, took office in 2000
• Tried to hide the Salmonella contamination at the Craon factory
• In May 2017, Lactalis conducted renovation at its factory, during which the
bacteria reportedly got introduced
• In August, the company found traces of Salmonella at the Craon factory, but did
not report it
• In September, the French regulators inspected the factory but failed to detect the
bacteria
• In November, Lactalis again detected the bacteria at the factory but refrained
from reporting it to authorities
• Under the French law, the company was obliged to report contamination only if
its products had been affected and could be a threat to public health
• Besnier stated that no alarm was raised because they had no signs showing that
their products were affected
• The Craon factory was acquired in 2006 by Lactalis from Celia, a company
that was taken over by Lactalis
• French Consumer Associations blamed the CEO for not assuming
responsibility of the incident
• French Retailers did not take the product recall issue seriously
• They continued to store and supply the recalled products
• The French Government was blamed for not monitoring the issue more
carefully
• DGH failed to detect the bacteria early
 IMPACT

• Severely affected Lactalis’ domestic and international markets

• Lay offs at the Craon factory
• Company flooded with a slew of lawsuits
• Call for Emmanuel Bensier to step down from the post of CEO
• France’s reputation was on the line
• The incident exposed the basic problems of France’s dairy products’ quality
control and supervision system
 LEARNING OUTCOMES

• There should be ethical transparency in all the corporates

• Leadership should be guided by moral values

• Effective regulation
 SUGGESTIONS

 Regular inspection of the product and the facility should be carried out

 Results and findings should be properly communicated to the concerned

authority

 Product should have been launched only after testing each and every batch ,
checking for its safety and consumption
 RECOMMENDATIONS

 Government should not be biased towards a corporate giant

 Strict ethical laws and policy should be followed

 There should be stringent repercussions for the same

THANK YOU