Lessons from Namyang fiasco

Namyang Dairy Products Chairman Hong Won-sik offered to resign Tuesday, apologizing for causing controversy over false claims about the anti-viral effects of the company’s yogurt drink, Bulgaris. In a press conference at the company headquarters in southern Seoul, he also vowed not to hand over management of the company to his children.

Hong’s resignation came three weeks after Namyang’s research chief claimed in a symposium that Bulgaris reduces the chance of COVID-19 infections by 78 percent. Following the announcement, the company’s shares soared and the yogurt drink sold out in many retail stores.

But experts questioned the validity of the claim, saying that the chief’s claims had not been clinically trialed or demonstrated. The Ministry of Food and Drug Safety accused Namyang of violating the food labeling and advertising act with misleading information and imposed a two-month suspension on its main dairy plant in Sejong, which accounts for 40 percent of the company’s output. The police raided the company’s factories and headquarters last week to look into allegations that Namyang exaggerated the results of its research on Bulgaris’ anti-viral properties.

This incident is not the first time that Namyang has created a huge wave of public resentment. In 2013, the company took flak when a voice recording revealed a salesman verbally abusing distributors to force them to buy more products. A boycott movement started soon, displacing Namyang from the top position in the market. The chairman’s eldest son was also dismissed from his position of managing director last month for allegedly misappropriating corporate money to lease foreign-made luxury cars for personal use.

Certainly, Namyang has no excuses for its clear attempt to fool customers with inaccurate information. Public anger is bound to be greater, given the norm that food companies should pay more heed to people’s health.