Want to see a slow motion PR trainwreck? Melamine, baby formula, and the rest of the dairy industry.

The PR disaster that is melamine-tainted baby formula continues a slow build that could engulf the entire dairy industry in a perfect storm of consumer mistrust.

The perfect storm I describe is one in which there are four conditions present simultaneously:

1. A consumer safety scandal emerges, without enough clear science to mitigate the risk;
2. A government regulator/overseer had lost the public trust;
   
3. Consumer brands can't or won't respond in a way to meaningfully assure consumers of the safety of their products; and
4. Consumers fill the vacuum with their own boundless quantity of worry for their safety.

Consumer safety scandal emerges
Melamine, a chemical that allows milk to be diluted and still appear to be protein rich, has been added to milk then used in baby formula in China and sickened over 6,000 infants.  Melamine has been detected in some baby formula produced for the US market, though not likely from Chinese milk.  Consumers are now very sensitized to the concept of melamine contamination.

FDA loses the public trust
The FDA's reputation with consumers has taken a beating as of late.  As the melamine scandals unfolded, on Oct. 3 they stated "FDA is currently unable to establish any level of melamine and melamine-related compounds in infant formula that does not raise public health concerns".

Then the FDA turned around and announced this past week that there is a safe level of melamine and set a standard that allows for some.

What happened in between?  Well the FDA tested baby formula on the market and discovered that 90% of it contained some trace amounts of melamine, and then they buried the results.  The Associated Press obtained the results via Freedom Of Information Act requests and published them.  This made the FDA's new melamine standard, produced without any new scientific studies during the interim, appear to be motivated purely to baby food formula makers.

Consumer brands fail to respond adequately
Abbott has not addressed this concern, and buried on their Similac website is a carefully worded statement that they could not detect any melamine in their product using the FDA method.  Consumers don't really care about the "FDA method", and this caveat will likely backfire.

Mead Johnson states on their website that the report obtained by the AP was an error, and no melamine was detected in their product. 

Nestle has a notice on their website saying that melamine has been found in one of their products, but is below a "safe level".

None of these responses is likely to be particularly comforting. 

Consumers fill the vacuum with worry
Melamine is a hot topic of conversation right now.  Check out this graph of Google search relevancy for the term "melamine":



Relevance of the search term "melamine" took a spike in 2007 during the
tainted pet food scandals, but has positively spiked in the last 45 days as it became clear it affects baby formula.  Discussion on twitter and digg.com are high as well.

Conclusion
Consumers are starting to ask questions beyond baby formula.  Nestle recently stated that melamine-tainted animal feed passed through to milk that was produced in baby formula and then sold in South Africa.  A significant amount of animal feed for US livestock comes from Chinese sources.  If testing reveals melamine in dairy products on US grocery shelves either from manufacturing or through tainted animal feed, the entire US dairy industry will experience an enormous scandal.

Consumer dairy brands should assume that more than one nonprofit in the US is currently putting milk, cheese, and other dairy products through melamine testing to try and find a melamine presence.

Clearly the baby formula makers should already be in crisis mode, and the rest of the dairy and meat industry should be spinning up their rapid response operations.  A crisis could hit at any time.

Disclosure: Neither I nor my firm work on any baby formula or consumer dairy brands.

Correction (12/1/2008): I was reminded by colleagues that other staff at my firm have worked for Abbott Labs' baby formula division previously, but we are not doing so now.