By Ellen Butcher, Senior Researcher
In the fallout from the Fonterra botulism scandal, Chinese officials have begun to question the legitimacy of New Zealand’s well-publicised ‘100% pure’ brand. Fonterra is New Zealand’s largest company, accounting for 25% of the country’s export earnings, with China being their largest market. The company’s value to the economy means that its conduct and international reputation can have severe economic repercussions for the country. This was demonstrated on Monday when the New Zealand dollar took a hit as the Fonterra scandal hit the headlines worldwide.
Could one contaminated pipe in a Waikato dairy plant expose brand New Zealand to greater scrutiny across the board? Quite possibly, yes. Increasing heat is being placed on the truth behind the country’s claims of high environmental standards, with critics citing New Zealand’s refusal to sign up to binding targets at the most recent climate change talks as evidence of a lack of commitment to the ideals it markets itself on. Against a backdrop of government cuts for the Department of Conservation – the agency responsible for protecting some of the country’s greatest assets – and the Prime Minister, in the same breath, waxing lyrical about the stunning scenery before advocating its exploitation through an expansion of mining and oil exploration, this scepticism is hardly surprising.
While Fonterra is certainly taking a hit, with its share price tumbling by 8.7%, it’s important to consider what this scandal might mean for other businesses in these ‘clean and green’ islands. Tourism currently accounts for 3.3% of New Zealand’s GDP, with 15% of international tourists in 2012 citing the country’s environmentally friendly image as being a prime motivator for their trip. Could the spotlight on the country’s less than exemplary corporate performance affect this? Perhaps, particularly considering the battering the country’s ‘spectacular natural scenery’ is currently taking from an expanding agricultural industry, with water quality declining as a result. The scandal could also domino onto New Zealand’s other agricultural exports, such as beef and lamb. For a country that is ‘built on a sheep’s back’, that could be disastrous.
While current issues have emphasized the need for the country to diversify its economy beyond industries that rely on the exploitation of its natural environment, it also begs the question of how to address the current loss of faith in brand New Zealand? While the best quality control measures in the world can’t protect a company from an occasional scandal, having the right measures in place in advance can reduce the fall-out. Rather than weakening the legislation put in place to protect the natural environment, the government should be strengthening its ability to enforce it. As for companies themselves – making sure that their policies and practices reflect how they project themselves, and the 100% pure brand, would make riding out a storm that much easier.
The same goes for branding a country as branding a business – make sure your marketing fits your mission and vice versa. If New Zealand fails to fix the chinks in its brand armour, then it may be time to ditch ‘100% pure’. As much as it hurts to say it, at present it looks like the Australians are right –‘100% pure’ is increasingly looking like ‘100% there for the taking’.