Dairy Giants Swiftly Recall Infant Formula Amid Widening Contamination Concerns
Three of the world’s largest dairy companies are recalling and blocking batches of infant milk formula following a contamination scare that initially began with Nestle. This issue has now expanded to include French companies Danone and Lactalis.
The recalls underscore how a single compromised ingredient can ripple through the highly regulated infant nutrition sector. This situation has prompted swift actions from both regulators and companies eager to mitigate reputational damage and safeguard their market share, particularly in lucrative regions like China.
Read more: China Urges Nestlé to Work Quickly on Baby Formula Recall
Earlier this month, Nestle initiated a recall of several batches of infant nutrition products across numerous countries due to potential contamination with cereulide, a toxin known to cause nausea and vomiting.
A judicial inquiry is currently underway in France to investigate a possible link between the death of a baby and the Nestle milk. The French farm ministry has indicated that results from this inquiry are expected within approximately ten days.
On Saturday, the Singapore Food Agency ordered a precautionary recall of a batch of Danone’s Thai-origin Dumex Dulac 1 and Nestle’s Swiss-origin NAN HA1 SupremePro after detecting cereulide.
Privately-owned Lactalis announced on Wednesday that its nutrition unit is recalling batches of baby milk in 18 countries due to the presence of cereulide in an ingredient sourced from a supplier.
“All infant milk producers in France and internationally are likely to have been affected by deliveries of non-compliant raw materials from the same manufacturer, which led to recalls by Nestle and Lactalis,” a farm ministry official informed Reuters.
‘Share Price Reaction Seems Overdone’
On Wednesday, Danone’s shares fell by approximately 8.3%, reaching their lowest level since February 2025 during early trading. The company stated it is collaborating with Singapore’s regulator and confirmed that all controls indicated its products are safe, with no irregularities found related to Bacillus cereus, the bacteria that can produce cereulide.
The recent decline in share price has been attributed to broker downgrades, which cite foreign-exchange challenges, slower industry growth, and declining birth rates in China, all of which are impacting infant formula sales, according to Sagar Thanki, an investment analyst at Danone investor Guinness Global Investors.
Thanki noted that the drop in share price on Wednesday was specifically linked to the Singapore recall.
“The process involves high temperature and drying procedures that eliminate the bacteria, although some residual toxin may still be detectable, but well below the regulatory standard and thus safe for consumption,” JPMorgan stated in a note after discussions with Danone.
“Overall, today’s share price reaction seems overdone to us, although we understand the context following the Nestle recall.”
Infant formula accounts for about 21% of Danone’s total revenues, as per Bernstein analysts, while for Nestle, this category likely represents around 5%.
The supplier of the contaminated arachidonic acid (ARA) is based in the Netherlands, a Lactalis spokesperson confirmed, but ruled out that it was the Amsterdam-listed producer dsm-firmenich. The contaminated product was sold by a Dutch company but originated from China, according to a separate statement from the French farm ministry.
Nestle has also identified quality concerns at one of its factories in the Netherlands and has suspended sourcing ARA oil from the implicated supplier. dsm-firmenich has stated that none of its products were affected by the Nestle recall.
(Reporting by Mateusz Rabiega in Gdansk, Alexander Marrow in London, and Sybille de la Hamaide in Paris; editing by Milla Nissi-Prussak, Emelia Sithole-Matarise, Louise Heavens, and Barbara Lewis)
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Three of the world’s largest dairy companies are recalling and blocking batches of infant milk formula following a contamination scare that initially began with Nestle. This issue has now expanded to include French companies Danone and Lactalis.
The recalls underscore how a single compromised ingredient can ripple through the highly regulated infant nutrition sector. This situation has prompted swift actions from both regulators and companies eager to mitigate reputational damage and safeguard their market share, particularly in lucrative regions like China.
Read more: China Urges Nestlé to Work Quickly on Baby Formula Recall
Earlier this month, Nestle initiated a recall of several batches of infant nutrition products across numerous countries due to potential contamination with cereulide, a toxin known to cause nausea and vomiting.
A judicial inquiry is currently underway in France to investigate a possible link between the death of a baby and the Nestle milk. The French farm ministry has indicated that results from this inquiry are expected within approximately ten days.
On Saturday, the Singapore Food Agency ordered a precautionary recall of a batch of Danone’s Thai-origin Dumex Dulac 1 and Nestle’s Swiss-origin NAN HA1 SupremePro after detecting cereulide.
Privately-owned Lactalis announced on Wednesday that its nutrition unit is recalling batches of baby milk in 18 countries due to the presence of cereulide in an ingredient sourced from a supplier.
“All infant milk producers in France and internationally are likely to have been affected by deliveries of non-compliant raw materials from the same manufacturer, which led to recalls by Nestle and Lactalis,” a farm ministry official informed Reuters.
‘Share Price Reaction Seems Overdone’
On Wednesday, Danone’s shares fell by approximately 8.3%, reaching their lowest level since February 2025 during early trading. The company stated it is collaborating with Singapore’s regulator and confirmed that all controls indicated its products are safe, with no irregularities found related to Bacillus cereus, the bacteria that can produce cereulide.
The recent decline in share price has been attributed to broker downgrades, which cite foreign-exchange challenges, slower industry growth, and declining birth rates in China, all of which are impacting infant formula sales, according to Sagar Thanki, an investment analyst at Danone investor Guinness Global Investors.
Thanki noted that the drop in share price on Wednesday was specifically linked to the Singapore recall.
“The process involves high temperature and drying procedures that eliminate the bacteria, although some residual toxin may still be detectable, but well below the regulatory standard and thus safe for consumption,” JPMorgan stated in a note after discussions with Danone.
“Overall, today’s share price reaction seems overdone to us, although we understand the context following the Nestle recall.”
Infant formula accounts for about 21% of Danone’s total revenues, as per Bernstein analysts, while for Nestle, this category likely represents around 5%.
The supplier of the contaminated arachidonic acid (ARA) is based in the Netherlands, a Lactalis spokesperson confirmed, but ruled out that it was the Amsterdam-listed producer dsm-firmenich. The contaminated product was sold by a Dutch company but originated from China, according to a separate statement from the French farm ministry.
Nestle has also identified quality concerns at one of its factories in the Netherlands and has suspended sourcing ARA oil from the implicated supplier. dsm-firmenich has stated that none of its products were affected by the Nestle recall.
(Reporting by Mateusz Rabiega in Gdansk, Alexander Marrow in London, and Sybille de la Hamaide in Paris; editing by Milla Nissi-Prussak, Emelia Sithole-Matarise, Louise Heavens, and Barbara Lewis)
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