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| Namyang's dairy products thrown in a pile outside the company's headquarters in Seoul in May 2013, after it was hit for forcing subcontractors to purchase products nearing expiration dates. Korea times file. |
By Kim Jae-heun
Namyang Dairy Products may have to close two production facilities in Sejong City for two months for breaching the Act on the Labeling and Advertising of Foods after claiming one of its drinks is effective in thwarting COVID-19 infections.
The dairy firm said Tuesday that Sejong City Hall has issued an advance notice about its plan to shut down two Namyang factories there.
"Although the suspension of the business has not been confirmed yet, we will make a public announcement when Sejong City Hall decides to do so," a Namyang official said.
The dairy company said it will try to persuade the local government from taking severe punitive measures.
The local government will give Namyang up to two weeks to submit documents specifying its stance.
If the administrative measure is enforced, Namyang will have to close down two factories that are responsible for producing 38 percent of the firm's products, including yogurt drinks, milk and powered formula.
Namyang could suffer snowballing damage considering the nature of the dairy products that need to be manufactured at the right timing for supply.
The dairy firm is currently the No.1 fermented milk product maker in the country. Its popular yogurt drink, "Bulgaris," accounts for an 18.33 percent share of the domestic market for such products.
The closures of Namyang's production facilities in Sejong will affect the dairy company's product supply in the country and could force it to concede its top position. Local food product manufacturer, Binggrae, is just behind Namyang in the fermented milk business with a 16.1 percent market share.
Meanwhile, Namyang made a public announcement last Tuesday that Bulgaris possesses anti-viral properties that could be effective against COVID-19.
Its share price rose over 8 percent that day and surged another 28.68 percent the following morning as people rushed to purchase Namyang shares, trusting the company's questionable research results.
The Ministry of Food and Drug Safety (MFDS) dispatched officials to check the dairy firm's claim immediately and concluded that it is not true.
The ministry also accused Namyang of hosting a medical symposium that produced the claim, aiming to promote its yogurt drink instead of pursuing academic research.
As controversy grew, Namyang released an official statement last Friday admitting that the research was not based on human testing, but only on cells, from which the firm could not have concluded the effectiveness of the drink in combatting COVID-19.
"We apologize to our customers for causing misunderstanding with our research results," Namyang said in a statement.
Namyang's stock nosedived by nearly a third after the ministry's findings.
Customers and investors also protested against Namyang on the internet and even suggested boycotting the company's products.
