Snow Brand in more trouble on butter


Snow Brand Foods president Koshiro Iwase announced Friday the company's liquidation. On Saturday, parent Snow Brand Milk had its own apology to make.

Alex Frew McMillan
CNN Hong Kong

TOKYO, Japan -- Japanese food group Snow Brand Milk Products is in more trouble after confessing to tampering with the expiration date on its butter and to using past-due frozen butter in its milk and dairy products.

The company's managing director, Hideki Takenouchi, apologized to the public on Saturday after the revelation that Snow Brand rewrote the expiration date by one year on 760 tons of frozen butter.

It then used the butter in processed milk, ice cream and the like. The news sent the company's already battered stock tumbling on Monday.

It closed at 113 yen, a drop of 9.6 percent, after touching 105 yen at one point. That is close to its year low of 99 yen set at the start of February.

Milk scandal in 2000

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It's yet another blow for the Snow Brand name, once Japan's top dairy company. Snow Brand Milk is still trying to recover from a tainted-milk scandal in June 2000 that left 14,500 customers sick in and around the city of Osaka.

Snow Brand found itself with an inventory backlog of butter after the poisoned-milk incident. The company blamed that disaster on a power failure that led to bacteria growing in the milk.

So in March 2001, the company gathered 2,300 tons of frozen butter that was past its sell-by date from its Betsukai factory, in eastern Hokkaido.

Snow Brand extended the sell-by date by one year, after testing the butter and discovering it was safe to eat, Kyodo wire service reports.

Japan's health ministry has now ordered the company to improve its standards. The government in Hokkaido, where the rewriting took place, told the company it could only rewrite the freshness date after scientific tests on the food's safety.

Mislabeled beef

Adding to the company's problems, Snow Brand said on Friday that it will liquidate its 65 percent owned subsidiary, Snow Brand Food, by late April. That unit has confessed to deliberately mislabeling beef to claim a government subsidy.

The government offered to buy up an overstock of Japanese beef, in the wake of the discovery of Asia's first case of mad-cow disease. But Snow Brand Food admitted it disguised Australian beef as Japanese to claim the money.

The butter controversy came to light after the beef scandal, which prompted Snow Brand Milk to tell a Betsukai public-health center about what it had done.

The series of scandals casts doubt on the future of Snow Brand as a label and even as a company.

On Monday, investors could not sell Snow Brand Food stock and there were no bidders, as it crashed to 6 yen. The Tokyo Stock Exchange will delist it on May 23, and suspended trading on Friday.

Tokyo-based Snow Brand dates to 1950 as a company, but its predecessor was formed in 1925 as a farmers' cooperative in Hokkaido.It has about 6,700 employees.

Snow Brand signed an agreement to explore a business alliance with Nestle for its dairy products and baby foods in September 2000.