Nestlé CEO Philipp Navratil took the helm at the Swiss giant with the world’s largest food maker facing intense scrutiny – and, four months on, that has only gotten worse in the opening week of the year.
The company is battling to contain the fall-out of an international recall of infant formula that has spread across dozens of markets and will have the market again questioning the company’s decision-making and communication.
Nestlé, which has faced criticism over its infant-formula and baby-food business on a number of occasions over the years, has had to recall products from more than 60 countries because of a “quality issue” with an ingredient.
The company first put out a recall notice in December for specific batches of its Nan stage 1 formula in Europe as a precautionary measure following the detection of the Bacillus cereus bacteria.
However, the recall has been widened with formula also pulled from countries across Asia, the Americas and the Middle East.
“Following the detection of a quality issue with an ingredient provided by a leading supplier, Nestlé has undertaken testing of all arachidonic acid oil and corresponding oil mixes used in the production of its potentially affected infant nutrition products. No illnesses have been confirmed in connection with the products involved to date,” Nestlé says.
However, the SMA brand owner has faced accusations it delayed recalls and released information gradually. Meanwhile, 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, which says the oil was used in “around ten” Nestlé factories in Europe, argues the company “cannot be trusted”.
“Foodwatch has learned that contaminated peanut oil was used by around ten Nestlé factories producing infant formula in Europe, including in France. The group was aware of this at least since early December,” Foodwatch said in a statement yesterday (8 January).
“It is inexplicable that Nestlé delayed recalling products intended for babies and chose to release information piecemeal, nearly a month after becoming aware of the bacterial contamination. This is further proof that this multinational’s traceability is unreliable and that Nestlé cannot be trusted.”
Just Food has put those comments to Nestlé.
Analysts at Jefferies have calculated the risk to Nestlé’s sales could amount to around SFr1.2bn ($1.5bn). That equates to 1.3% of the Swiss giant’s total sales but it will still frustrate Navratil, who will see the situation as a headache he doesn’t need as he settles in after only a matter of months in the hot seat.