Overview
Shares in two of Europe's largest food groups, Nestlé SA and Danone SA, ticked down on Wednesday while markets absorbed renewed attention on their handling of a contaminated infant formula episode. The scrutiny follows a joint investigation by Radio France, RTBF and RTS that raised questions about the timing of product withdrawals and notifications to authorities.
What the investigation reported
The media outlets said tests uncovered cereulide, a toxin linked to vomiting and diarrhoea and considered particularly hazardous to infants, in an ingredient supplied by China’s CABIO Biotech. That ingredient, arachidonic acid oil, was reported to have been incorporated into infant formulas produced by a number of manufacturers, including Nestlé, Danone and Lactalis, prompting recalls across several countries.
According to the investigation, 838,000 cans of infant formula were held back from Dec. 26 at Nestlé’s facility in northern France and at other production sites. The report also said some products already in distribution channels or in consumers' homes remained without a public recall or immediate notification to European authorities. The outlets asserted that Nestlé performed so-called "silent" withdrawals in Austria and Germany from Dec. 24, and that Danone removed products from sale in January prior to issuing public recalls.
Companies' account of events
Nestlé provided a timeline stating it first detected low levels of cereulide in late November. The company said it ceased using mixes containing the supplier's arachidonic acid oil once contamination was confirmed on Dec. 24, notified the supplier on Dec. 29, analysed samples through Jan. 3 to gauge the problem's extent, and initiated public recall actions beginning Jan. 5. Nestlé disputed the characterisation that it carried out silent withdrawals.
Legal and investigatory status
Prosecutors in Bordeaux and Angers have indicated they did not find a link between the deaths of infants and the batches of baby formula that were recalled. Separately, Radio France reported that an inquiry opened in Meaux was transferred to Paris.
Market context
Equity moves were modest: the shares slipped but did not register large swings, reflecting investor attention to both the reputational and operational questions raised by the reporting, as well as to the companies' public statements and ongoing legal inquiries.
Summary
A joint media investigation has questioned whether Nestlé and Danone acted promptly in alerting authorities and consumers after cereulide was found in an ingredient supplied by CABIO Biotech. Nestlé has set out a timeline that includes initial detection in late November and public recalls from Jan. 5, and prosecutors have said they have not established a link between recalled formula and infant deaths.