European investigations into dioxin-tainted food caught up with France’s global dairy company Danone on Wednesday, when it pulled a batch of its fruit yogurts from Romanian shelves over fears of contamination.
Danone’s Romanian subsidiary said that it had traced and secured an unspecified “quantity” of yogurts possibly contaminated with dioxins, a week after an investigation led by European health authorities. The products were located in Danone’s main warehouse and several other points in the distribution network, the company said.
European food safety regulators are trying to track down dioxin traces found in guar gum, an India-grown additive which is usually a perfectly safe thickener for dairy products. After initial investigations in Switzerland and the Czech Republic, the net has now closed on “numerous European countries,” according to Danone, “Romania included.”
Danone stressed it did not use guar gum directly, but that the yogurts’ fruit preparation manufactured in the Czech Republic used a tiny amount of the additive, equivalent to 0.02% for each cup.
The financial effects on Danone, if there are any, will only be clear next week after the release of laboratory testing results.
Shares in Groupe Danone fell 13 eurocents (18 cents), or 0.2%, to 54.70 euros ($74.22) in Paris Thursday morning. The slight fall was nonetheless enough to send it to the bottom three performers of Paris’ CAC 40 index, which rose 55.99 points, or 1.0%, to 5,574.16.
Investors are likely to be more interested in the formal $17 billion offer for Dutch baby nutrition company Numico (other-otc: KNMUF – news – people ), which was announced last month but actually tabled on Monday. (See “Eschewing Snacks, Danone Goes For Baby Food”)
Clearly, food contamination scares can harm the reputation of a company and saddle it with costly litigation fees. British confectionery company Cadbury Schweppes (nyse: CSG – news – people ) is still facing lawsuits over a salmonella scare in 2006 that resulted in a recall of millions of candy bars. The company has since spent $40 million in new quality control procedures. (See “Cadbury Shares Turn Sour”)
Dioxins are harmful man-made chemicals with high toxic and carcinogenic potential. They were used in high doses to poison Ukrainian president Victor Yuschenko in 2005, and in 1999 Belgium had a dioxin scare after 500 tons of tainted animal feed was distributed throughout the country.
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