Retailing, Franchising, and Consumerism Business Intelligence in China

Nongfu Spring Claims CNY1 Billion Loss Over Arsenic Scandal

Chinese beverage manufacturer Nongfu Spring has disclosed to the local media that it is likely to suffer a loss of CNY1 billion as a result of reports of arsenic in certain of its soft drinks.

An insider of Nongfu Spring told the media that the the estimated CNY1 billion loss is only the loss in sales and excludes the impact on the company's brand image.

Statistics from local supermarkets like Hualian and Carrefour show that compared with a week ago, the sale of Nongfu Spring's 30% fruit & vegetable mixture juice and its water-soluble C100 — two drinks that were reported to contain arsenic — declined by 46% and 53%, respectively, and southern China is the most hit region. In Guangzhou's Trust-Mart, the sale of the two drinks even dropped by 73% and 91%, respectively.

Based on the above figures, Nongfu Spring estimated that it may suffer a total sale loss of CNY1 billion.

On November 23, 2009, a report released by the Haikou Industrial and Commercial Department showed that the 30% fruit and vegetable mixture juice and the water-soluble C100 drink made by Nongfu Spring contained excessive level of the toxic chemical arsenic. On November 30, 2009, a spokesperson for Nongfu Spring declared that Haikou Industrial and Commercial Department failed to follow the rules in taking the samples, and in re-testing the samples and releasing the report to the public. Zhong Yanyan, the president of Nongfu Sring even said that that the report was made with the intention of harming the company. However, Zhong's remark was disputed by Wang Jianlu, the vice director of Haikou Industrial and Commercial Department, who declared that they did everything strictly according to the relevant laws. The State Administration for Industry and Commerce later intervened in the case, but the truth of the claims and counter-claims still needs to be determined.

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