Nestlé CEO Philipp Navratil has emphasised “food safety and trust come first” in a videoed apology for the recent infant-formula recall at the company.
What started as a relatively benign precautionary European recall of Nan stage 1 formula in mid-December connected with the detection of the Bacillus cereus bacteria soon escalated globally at the start of the new year as the food giant identified a problem with an ingredient from an external supplier.
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Nestlé and Navratil have now conceded that the source of the affected products is a factory in the Netherlands as Navratil took the unusual step of posting a video on YouTube yesterday (13 January) as questions over the company’s credibility mount.
“All recalls have now been announced,” Navratil said as he explained how they were initiated on a country-by-country or regional authority basis following the initial European announcement in December.
By early January, 37 European countries were on a published list, along with seven in Nestlé’s America’s reporting region, including Argentina and Mexico, and nine within Asia, Oceania and Africa, such as China and Australia.
The recall also expanded to SMA, SMA Alfamino and Beba formulas but remained a precautionary measure as the toxin cereulide, which is produced by some strains of Bacillus cereus, was identified as the root cause.
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By GlobalDataThe toxin, emanating from the supply of arachidonic acid (ARA) oil, an Omega-6 polyunsaturated fatty acid, can cause vomiting and abdominal cramps in babies.
“I want to reassure you that there have been no confirmed cases of illness linked to the affected products to date. Nonetheless, it was important to act quickly and transparently,” Navratil said in the video.
“As soon as we confirmed the issue, we engaged proactively with the respective health and food-safety authorities in each country that received the affected products. We collaborated closely with the authorities and followed their guidance. This meant that the recalls were announced locally, one by one, as planned.”
However, employing such a slow-burn tactic has attracted widespread criticism as parental concern spread globally and has raised questions over Nestlé’s reputation given the world’s largest food maker has faced flack over its infant-formula and baby-food business on a number of occasions in the past.
Industry analysts are already calculating the possible impact on Nestlé’s sales, with the situation likely to be at the top of the list of questions Navratil and CFO Anna Manz receives when the company publishes its 2025 financial results next month.
Consumer advocacy group Foodwatch said last week it had learnt a contaminated peanut oil was used in “around ten” Nestlé factories in Europe, and argued the company “cannot be trusted”.
Navratil sought to head off such criticism, emphasising today that “the safety and quality of our products” is paramount.
“I first want to apologise sincerely for the worry and disruption this may have caused parents, caregivers and our customers. You trust us to provide products that are safe and of high quality, and we take that responsibility very seriously,” the CEO sought to reassure.
“What’s important to me in this situation is that we remain guided by our values: food safety and trust come first. This is at the heart of everything we do and reflects our deep sense of responsibility and care. The actions we are taking demonstrate our commitment to upholding the highest quality and safety standards.”
Nestlé has said that the recalled formulas “represent significantly less than 0.5% of annual group sales and the financial impact of the recall is not expected to be significant for the group”.
However, reputational damage could have implications for Nestlé’s wider infant-formula business not hit by the recalls.
Baby powders sit within the group’s Nutrition and Health Science division, which accounted for SFr15.14bn ($18.9bn) of Nestlé’s total annual revenue of SFr91.35bn in its 2024 financial year.
Analysts at Jefferies have calculated the risk to Nestlé’s sales could amount to around SFr1.2bn
David Hayes, an equity analyst covering Nestlé at Jefferies, said last week the revenue generated from the original sales of the products will remain unchanged but added: “We expect the costs arising from the recall – refunds, replacements, logistics – to be treated as expenses within COGS, we think in Q1. The lost sales due to longer term consumer concern on the brand safety could weigh on sales and associated profit this year.”
