Danone does not foresee any tightening of regulations following the infant formula recalls, citing a minimal impact on sales for the dairy giant.
In its full-year results released on February 20, Danone stated, “the current financial impacts identified are not material,” although it noted that an assessment will be finalized once the recalls are completed.
However, during a follow-up call with analysts, CEO Antoine de Saint-Affrique and CFO Jürgen Esser detailed the anticipated financial impact for the first quarter of 2026. Esser explained, “We expect that supply disruption to have a one-off impact on our Q1 performance, and we estimate this one-off impact to be between 0.5-1% of net sales in the first quarter.” Given Danone’s sales of €6.84bn ($8.06bn) in the first quarter of 2025, this estimate translates to approximately €68.4m. Notably, Danone’s specialized nutrition division, which includes the infant formula business, generated €2.31bn during the same period.
The recall incidents began in mid-December when Nestlé identified Bacillus cereus bacteria in a particular brand of baby milk powders. Danone’s involvement followed in January, as notices regarding the cereulide toxin expanded globally from a shared supplier in China.
In its recent annual results, Nestlé projected a one-off first-quarter impact of SFr200m ($257.6m) on sales due to “customer returns and stock shortages,” but cautioned that further impacts remain uncertain.
Analysts have raised concerns about the potential loss of reputation and trust stemming from these recalls and the repercussions for formula sales. During a Q&A session, de Saint-Affrique remarked, “We don’t see at this stage any major brand or brand equity impact on IMF [infant milk formula].” He acknowledged, “There is obviously a disturbance on the shelf,” yet emphasized that significant impacts are not evident thus far.
CFO Esser further added, “Our ambition is to win back trust and credibility because it is extremely important in that category.” He acknowledged that it’s still early to draw conclusions but noted that current market share data is encouraging.
Looking ahead, Esser indicated that Danone anticipates the recall situation to normalize by March in Europe and the Middle East, where affected products have been withdrawn. He stated that China remains unaffected.
Despite the recalls, de Saint-Affrique dismissed the notion of heightened regulatory measures, although authorities in France and the EU have adjusted the allowed levels for cereulide. He stated, “We don’t see anything major but it’s very early.” He emphasized that the infant milk formula category is already heavily regulated, with over 300 quality checkpoints across Danone’s factories.
The CEO expressed confidence in the safety and quality of Danone’s products, affirming that they are backed by extensive scientific evidence and stringent testing. He concluded, “The entire focus of the organization is fundamentally about two things: making sure that the products are back on shelf, and reassuring our consumers and healthcare professionals who are actively engaged online and through our care line.”
As Danone navigates through these challenges, the company is keenly aware of food and beverage industry trends and consumer expectations in the food and drink business, aiming to sustain consumer trust while responding to evolving food and drink consumer trends.
