The Brazilian Milk Fraud Scandal Involving the Italian Food Conglomerate Parmalat.

2765 Words Sep 24th, 2014 12 Pages
Running Head: THE BRAZILIAN MILK FRAUD SCANDAL

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The Brazilian Milk Fraud Scandal Involving the Italian Food Conglomerate Parmalat. A Brief Case Study on a Transnational Corporation In Your Home Country Gabriel Ferreira International Public Relations – PUR6608 class University of Florida

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The Brazilian Dairy Market background. Over the last decade, the Brazilian dairy market has been one of the most fast growing dairy markets in the world. In the early 90s, the Brazilian agro-industrial milk sector suffered three very important changes: it starting being an open economic market for international competitors; at the time inflation was decreasing; and so milk prices drop
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Taking advantage of the fragile moment Parmalat was passing through, LEAP Investments Ltd bought its Brazilian subsidiary for $60 million (Grain Report, 2011). After a tumultuous year, Parmalat ended up

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declaring bankruptcy and a new company named Parmalat S.p.A. was founded in October 1st of 2005. After passing through an ample reorganization, extending its lines of products, recouping the leadership in the milk segment and entering new markets, the company was profitable once again. Meanwhile, Brazil was placed as the 6th largest worldwide dairy products market in 2003 (today it ranks 2nd place). Later on in 2011, the French company of dairy and food products, Lactalis, assumed the shareholding control of the Parmalat S.p.A. (Parmalat Annual Report, 2011).

The Milk Fraud Scandal Backdrop. In 2007, the Brazilian milk and dairy production market was at its apex. With the advent of huge distribution points known as supermarkets coming to Brazil with all its strength, creating a competitive scenario amongst small, medium and large businesses, long lasting dairy products were needed to ensure long life shelf and provide consumer comfort and convenience (Nahmias, 2008). This is when Parmalat’s world famous ultra-high temperature milk (UHT) sold in milk cartons came into place.

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