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Fonterra has been named in a top-10 world list of companies most criticised for their impacts on the environment, health and communities.
The list, compiled by Swiss-owned RepRisk, a consulting firm that analyses companies' exposure to controversial issues and news, is headed by Sanlu Group, the Chinese joint venture in which Fonterra holds a 43% stake.
Big Chinese rival Inner Mongolia Yili Industrial Group Co took second, and Fonterra was ranked sixth most vilified in the September "top 10" list issued by RepRisk.
China Mengniu Dairy Co was 10th place - also because of the disclosure that 22 Chinese companies had produced milk contaminated with melamine.
The RepRisk rankings "were heavily influenced by the contaminated Chinese milk powder scandal", it said.
Fonterra specifically came under fire for its association with Sanlu and was criticised for not earlier making public information about the contamination.
Sanlu took first place because of claims that though it discovered farmers or brokers diluted milk with water and added melamine to boost its protein level, it did not make an official product recall until after the New Zealand government intervened.
Thousands of babies were made ill and several died after drinking the contaminated milkpowder, and affluent parents switched to foreign-made infant formula.
Fonterra spokesman Graeme McMillan says it is surprising that the company is featured in a ranking based on media coverage of high-profile news events.
"Our research tells us that people have differentiated quite clearly between the large number of Chinese dairy companies involved and Fonterra," he says.
"The basis of this ranking seems to be purely media coverage and we have no further information about the criteria that has been applied.
"All along we have taken responsibility for our involvement as a shareholder in Sanlu.
"But what's disappointing is to see Fonterra listed separately and when there has been no question over the quality and integrity of our products and supply chain, made with milk sourced outside China.
"This incident was isolated to companies sourcing local raw milk in China, which was deliberately adulterated by third party suppliers in a criminal act."
RepRisk had not contacted Fonterra to confirm the basic facts before publishing its report, he says.
Shareholders unhappy
Meanwhile, Fonterra farmer shareholders who backed its investment in the Sanlu Group are unhappy the reputation of dairy foods has been damaged, and they are tied to the issue.
"Fonterra farmers are disturbed that our co-operative's name has been associated with the milk supply contamination in China," the cooperative's shareholder council said in its annual report.
"This may be a setback for the board in gaining continued farmer support for Fonterra's offshore growth strategy."
The debacle is thought to have cost the farmer shareholders over $200 million - Sanlu is reported to now be nearly bankrupt.
China International Business newspaper reports the Chinese venture's estimated loses are over 700 million yuan ($172m) with rivals Sanyuan and Wondersun interested in taking over at least part of its operations.
The shareholders bluntly state that their directors have the ultimate responsibility for protecting Fonterra's name, brands and reputation.
Three of those directors are standing against a former chairman of the shareholder council for three seats on the board.
Fonterra had to recall one batch of its own brand Anmum Materna milk, because it had been made by Sanlu using contaminated milk, and it has had to devote resources defending its brand in markets such as Bangladesh and the Philippines.
It has separately put $8.4m into a Chinese charity for child health, but this has not stopped the reputational damage spreading to Fonterra itself.
