Monde Nissin rocked by mass foreign recall of “Lucky Me”

Monde Nissin [MONDE 13.04 2.40%] [link], the food manufacturer owned by Betty Ang and her husband, Hoediono Kweefanus, was blind-sided by a public recall of its “Lucky Me” instant noodle product after Taiwan, France, Ireland and Malta, all issued recall notices for variants of the Lucky Me line of products for elevated presence of ethylene oxide, a pesticide used on herbs and spices.

MONDE responded to the recall notice by reassuring consumers that it satisfies the ethylene oxide rules for the Philippines and the US, and that MONDE itself didn’t add the pesticide to the product, though the pesticide may have been in some of the ingredients used in the manufacture of Lucky Me in other countries.

The authorities in Ireland tested a batch of Lucky Me that was produced in Thailand, but no information was available on the source of the Lucky Me products that failed inspection in Taiwan, France, and Malta.

Our own Food and Drug Administration said that MONDE uses a local manufacturer for the ingredients, and so our packets of Lucky Me are not impacted by this recall. The FDA is investigating the recall.

MB BOTTOM-LINE

The stock is down about 7% from the time the news first broke, which came after a 4-day, 13% rally in MONDE’s price from P12.70 to P14.40, which itself has come after an 8-month, 39% drop in the price from the highs of September when it was briefly trading above P20.50/share.

All this is to say that the roller-coaster ride that is MONDE’s price action is unreasonably wild and entertaining for what really should be a boring and uninteresting story.

I get why MONDE would underline its compliance with Philippine and US law in its press release (these are massive markets for MONDE), but their focus on those markets seemed to imply that MONDE was less concerned with its compliance to the offended markets’ health regulations.

I also get why MONDE would make a big deal out of noting that it doesn’t purposefully add the pesticide to its products, but it’s hardly reassuring for the company to sketch out a scenario where these harmful chemicals might end up in MONDE products because some upstream supplier used them on some ingredient.

Does MONDE only test ingredients of products intended for sale in the PH and US for these pesticides?

If they test all ingredients for this pesticide, what caused their tests to miss these batches?

I have no doubt that inflation has caused almost every food manufacturer to scroll a couple of pages deeper into their purchasing contacts for certain ingredients due to price and logistics concerns, but with food, you just can’t cut corners.

I’m not saying that MONDE cut a corner here, but I am saying that the statement from MONDE doesn’t do enough to address the problem to make this feel like a low-probability fluke or one-off. 

--

Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.