Infant formula remains under the microscope following a tragic and turbulent period that brought infant fatalities and a spate of recalls. It all centred around concerns over the toxin cereulide.
Specific batches of Nestlé-owned SMA, Danone’s Aptamil and Lactalis’ Picot have all been subject to recalls, which began in December 2025 and have now affected 60 countries, amid concerns they may be contaminated with the heat-stable toxin. Other manufacturers affected include French firm Vitagermine and HOCHDORF Swiss Nutrition AG.
The toxin has since been linked to a third-party supplier of arachidonic acid (ARA) oil, used in some formulas to provide growth properties similar to breast milk, and widely thought to be supplied in this case by Chinese firm Cabio Biotech.
The financial fallout for those manufacturers affected could be significant, with financial analysts Jefferies estimating losses directly stemming from the costs of recalls could reach as high as €1.43bn.
But as the ripple effect across consumer perceptions takes shape, the financial blow might be the tip of the iceberg. So, how else might the damage unfold? How are manufacturers navigating the potential fallout – and what could they do better? And what does this mean for the long-term health of the category?
Though both Nestlé and Danone maintain no causal link has been established between their products and cases of illness in babies, the optics of any product recall – particularly in an emotionally loaded category like infant formula – can be impactful.
“Food manufacturers face significant reputational and financial exposure when recalling or withdrawing products, as consumers place high levels of trust in their production processes,” says Freddie Schlesinger, head of product recall and reputational risk at Lockton.
“When incidents involve infant formula, they quickly become an emotive issue,” he adds. “In the worst cases, these situations go beyond a product recall to become matters of public health and corporate responsibility, affecting not only the manufacturer but also retailers, suppliers, and broader consumer confidence. Some brands have struggled to recover after large-scale contamination events.”
Compounding this risk is the fact infant formula manufacturers have found themselves making headlines for all the wrong reasons on numerous occasions in recent years.
In early 2025, a report by the UK’s Competition & Markets Authority found rampant price inflation in the category meant some parents were overpaying by as much as £300 per year, parting with cash unnecessarily at a “vulnerable moment, based on incomplete information”. The watchdog urged for labelling and advertising rules to be strengthened to remove intangible product claims.
In the US meanwhile, in November 2025, infant formula brand ByHeart was forced to issue a recall of its formula cans and single-serve “anywhere pack” sticks amid associations with an outbreak of botulism, with 51 infants identified with food poisoning as a result, across 19 states.
Other infant formula crises
Of course, go back further and the category has also weathered the 2008 melamine adulteration scandal in China, and the 2017-18 Lactalis salmonella-linked infant formula recall.
All which has a ripple effect on consumer behaviour, believes Ajay C Thomas, CEO at regulatory compliance platform Euverify. “It immediately undermines confidence in quality assurance processes,” he says. “Awareness of supply chain vulnerabilities and potential contamination leads parents to scrutinise labels, sourcing, and safety certifications more carefully. The industry must anticipate that safety incidents, even minor, have lasting repercussions on trust.”
And the category can ill afford the repercussions that come from contamination crises, especially as it already faces an uphill battle in some markets.
Though it’s too early to say how sales may be impacted by this latest crisis (albeit shares in both Danone and Nestlé fell sharply in the immediate aftermath of recalls) global demand for infant formula has been on a declining trajectory for the last five years, according to research by Innova Market Insights, with value growth the result of price increases rather than an uptick in demand.
There are numerous factors feeding into this decline.
In China, falling birth rates and a migration to more affordable domestic brands over imported options fuelled a value decline of 5.6% in 2024, Bain & Company and Worldpanel reported. In India too, a preference for homemade foods and the promotion of exclusive breastfeeding by policymakers (its Infant Milk Substitutes Act, 1992, bans advertising, free samples, and marketing of formula for children up to two years) has also dented demand.
Across the Asia Pacific region as a whole, milk formula, which accounted for 82% of the region’s baby food retail sales in 2024, is projected to decline to 79% by 2029
Euromonitor International
Indeed, across the Asia Pacific region as a whole, milk formula, which accounted for 82% of the region’s baby food retail sales in 2024, is projected to decline to 79% by 2029, according to Euromonitor International.
Manufacturers will therefore be keenly aware of the need to avoid further fallout or erosion of brand loyalty. As a result, many affected by the current crisis have been quick to communicate with and reassure consumers.
A video statement from Nestlé saw its CEO Philipp Navratil apologise for the “worry and disruption” the recall caused for parents, caregivers and other customers, and insisted there had been no confirmed cases of illness linked to the recalled batches within its portfolio.
Danone too in a statement said its “routine control and additional targeted analyses” confirm its products are safe but “as a responsible manufacturer” it has recalled “a very limited number of specific batches of infant formula products.
“Danone’s priority is to ensure that parents and healthcare professionals can continue to place their trust in the safety and quality of our infant formula products,” the company added.
“The classic strategy of responding swiftly and transparently is a fundamental basic for a reason and it’s particularly important with this consumer audience,” says reputation and crisis PR consultant Emma Streets. “Both brands have responded, although Danone was slower off the mark, and both looked to have been impacted with share price falls in the short term. Nestlé’s response’s tone and format (via its CEO in a video) is a solid step to provide reassurance.”
She adds: “Transparency - something that major corporates like this aren’t necessarily known for - and sharing meaningful lessons to avoid this issue happening again need to be prioritised.”
Policy makers’ act on infant formula crisis
Policymakers have also taken swift steps to assuage concerns. The EU has since placed new restrictions on imports of ARA from China, for example. All ARA producers in China will need to show member state authorities an official certificate proving that labs have tested the ingredient for cereulide.
It’s critical that responses to go beyond words, insists consumer rights organisation Foodwatch, which filed a criminal complaint in Paris in January on behalf of eight families who say their babies fell ill after consuming contaminated infant formula.
“Stronger enforcement of food safety laws is urgently needed,” says spokeswoman Sarah Häuser. “Companies that delay public warnings or withhold critical safety information must face real, deterrent sanctions. So far, the consequences for such violations have been far too lenient.”
Hundreds of parents have reached out to the organisation for guidance, she adds, amid concerns that their children may have been affected. “We have the impression that many parents who use formula are worried about the occurrence of toxin in baby milk right now.”
These consumer concerns mean it isn’t only directly affected manufacturers that could feel the effects of the infant formula’s latest controversy.
“Even if only certain batches are affected, parents will extrapolate this risk to all products in the category,” points out Thomas. “Safety perception directly drives purchase behaviour, meaning manufacturers face both reputational and financial consequences.”
“In reality, anyone’s recall becomes everyone’s problem,” adds Laura Modi, co-founder and CEO of Bobbie, an organic ‘European-style’ formula manufactured in the US and sold direct-to-consumer. “It erodes overall trust in the industry, and that must be repaired slowly. The burden should not be on parents to turn to anonymous Reddit threads or Google searches, it is on the companies to be upfront and transparent in their quality and safety standards.”
She says the brand is now, and has always, prioritised transparency as a way to build credibility, sharing details of its supply chain, ingredients sourcing and processing, testing protocols and facility. Parents can even trace the testing results for every can shipped.
Asked whether she thinks the events of the last few months could see major brands lose market share to smaller players like Bobbie though, she believes the reality is far more nuanced. “In moments like this, the size of a company matters far less than its posture. In the last four months we have seen American start-ups and massive global players all go through a bacterial recall.”
It’s likely this latest controversy to strike the infant formula category will drive wider change, believes Streets. “We can expect the informed customer expectation to keep driving all brands to become more transparent, accountable and share how they develop and safeguard product quality,” she says. “The larger and more established brands arguably have more responsibility to do this and lead the way.”
Modi agrees. “Parents aren’t looking for silence right now, they’re looking for brands willing to get loud, to show their work, and to take action towards improving the industry as a whole.”
