Danone, Nestlé Stocks Drop Following Baby Formula Warnings

Both Danone and Nestlé experienced significant decreases in their stock prices following a serious safety issue related to baby formula. On the afternoon of January 28, 2026, Danone’s shares fell by 0.48%, while Nestlé’s dropped by 0.33%. These declines came after several national authorities issued warnings following Danone’s recall of specific formula batches, announced the prior Friday.

Details of the Recall

Danone initiated a recall due to concerns that certain product batches might be contaminated with cereulide, a toxin linked to nausea and vomiting. The recall affects only a small number of batches. This action is a response to similar measures taken by Nestlé earlier in January, which had seen potential contamination issues arise in December when cereulide was discovered in a Nestlé factory in Nunspeet, Netherlands.

Financial Implications

• Analysts forecast Nestlé’s recall could lead to losses exceeding €1 billion.
• Despite these predictions, Nestlé stated it does not expect a substantial financial impact.
• Danone’s infant formula sales represent approximately 21% of its total revenue, while for Nestlé, this figures around 5%.

Supplier Issues and Investigation

The contamination issues have been traced back to a single Chinese supplier that provides arachidonic acid oil, an essential ingredient in high-quality infant formulas. This crisis has also impacted Lactalis and smaller companies such as Vitagermine and Hochdorf Swiss Nutrition.

Ongoing Investigations

French authorities are examining the tragic deaths of two infants who reportedly consumed the affected Nestlé formula. As of now, no direct link has been established between the fatalities and the contaminated products. A spokesperson for Nestlé emphasized the company’s commitment to cooperating fully with authorities and ensuring transparency during the investigation.

Company Responses

In light of the ongoing situation, both companies have reiterated their dedication to food safety. Danone assured consumers of its uncompromising stance on safety and quality. Nestlé, in its recall announcement, stressed that the action was consistent with its strict protocols for product safety.