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By: Hope Lee

As Europe is pondering and investigating the source of the e coli outbreak, on the other side of the world Taiwan and China are urgently recalling massive quantities of foods and beverages which are contaminated with DEHP and DINP. Taiwan has recalled 460,000 bottles of sports drinks and fruit juices so far, while China has announced it is banning up to 948 items imported from Taiwan, with the number on the list possibly set to rise.

Other countries, including the Philippines, South Korea and Hong Kong, have also taken measures to suspend imports from Taiwan and tighten their testing procedures.

DEHP is a general purpose plasticiser which is mainly used to make PVC soft and pliable. It is primarily used in the manufacture of sofas, car seats and other non-food items. Prolonged ingestion of DEHP-contaminated foods and beverages could lead to cancer or damage to the reproductive system. It has been reported that DEHP can be particularly damaging to a young male’s fertility.

The source – how the chemicals filter through the food chain

In mid-May 2011, Taiwan’s Health Department found that two major local food additive suppliers added DEHP and DINP to clouding agents which were then sold to food and beverage manufacturers. The normal main ingredient in clouding agents in Taiwan is palm oil.

However, some suppliers replaced palm oil with the two chemicals so as to save costs while also achieving the same colour consistency for the finished goods. Food and beverage companies then used these clouding agents to manufacture their consumer products. The clients of the two ingredients suppliers include major companies such as Uni-President, Wei Chuan, Brand’s Taiwan Sugar and Taiwan Salt. Their finished products are sold in supermarkets and all sorts of foodservice outlets. As the story continues to unfold and suspected products are analysed, it remains unclear as to how many brands have been contaminated.

Up until now, Taiwan’s Health Department has reported that more than 780 products (soft drinks, jam and dietary supplements) have been found to be contaminated, with at least 244 companies affected by the scandal. It has been reported that some food and beverage companies might be aware of the chemical ingredients used but others not. Whatever the scenario, the damage has already been done.

Impact on the domestic market

This scandal could be hugely damaging to both the food and beverage industry and the foodservice channel in Taiwan and the scandal will mean a gloomy short-term forecast for both. The scandal broke in the late spring and is ongoing, so consumer confidence has been badly hit and will be hard to restore over the short term.

As soft drinks were the first products reported to contain the contaminated ingredients, their sales will bear the brunt. Consumers are and will remain cautious when choosing their soft drinks. Some may switch to tap water from packaged soft drinks, while other will choose drinks with less complex ingredients such as bottled water or reduce their consumption of certain soft drinks to mitigate the health risk.

Industry sources estimate that the island’s retail sales of soft drinks could fall by 20% in 2011 compared to 2010, equating to a net loss of US$540 million. There is no estimate with regard to the potential loss in revenue for the food industry as yet, but it is expected to be substantial.

Foodservice outlets, particularly cafés which sell cold drinks and Chinese-style fast food outlets, are also suffering from a sharp drop in number of customers. Euromonitor International’s data shows that on-trade value sales of soft drinks in Taiwan were worth around US$1.3 billion in 2010.

The country’s soft drinks market recorded a value decline of 0.4% in 2009 but then registered positive sales growth of 1.7% in 2010. Given the scandal, foodservice sales have little chance of growth in 2011. Consumers may think twice about eating out, and when they do will remain cautious about the drinks options offered by restaurants.

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