Mengniu shares tumble after latest China food safety scare28 December 2011
Shares in Chinese dairy Mengniu dipped 24% on the Hong Kong Stock Exchange today after the company was forced to destroy 25 batches of milk found to contain carcinogen aflatoxin.
Mengniu blamed spoiled cow feed for the latest food safety scare to hit the dairy. The company promised to introduce tougher safety checks following the news and said that none of its products currently on sale were affected.
The discovery wiped out HK$11 billion ($1.4 billion) off Mengniu’s market value as panic-stricken investors, fearful that consumers would avoid buying the company’s products, offloaded shares in droves.
“The Group believes that the incident was caused by moldy and deteriorated fodder taken by milk cows,” said a Mengniu statement.
"At present, all products available in the market within and outside China, including Hong Kong, have passed relevant standards.”
In 2008, Mengniu became embroiled in the melamine infant formula scandal which killed at least six babies and hospitalised 300,000.
Earlier this year, the Chinese Government closed 5,000 companies that had violated food safety rules and arrested 2,000 people in a crackdown that saw at least one death sentence and several hefty prison terms handed down.
Food ingredients Istanbul
Fi Asia China
Fi South America