Nestle SA is broadening its infant formula recall, adding specific batches of Guigoz in France and SMA in the United Kingdom to the existing list of withdrawn products. This latest expansion comes after the European Union introduced refined analytical methods for detecting the cereulide toxin, a compound known to induce nausea and vomiting. The Swiss food giant stated its decision was made "In light of the evolved EU method of analysis, and continuing to apply our strict internal standards for cereulide in infant formula."
The company's internal limit for cereulide in infant formula is a stringent 0.2 ng/g, which is more conservative than the European Food Safety Agency's (EFSA) new guidance of 0.43 ng/g. This proactive step suggests Nestle has identified levels exceeding its own robust internal threshold in the newly recalled batches. The initial recall, which affected approximately 60 countries predominantly across Europe, Asia, and the Americas, now sees these additional European markets included.
Supply Chain Scrutiny Intensifies
The cereulide toxin has been linked to ingredients sourced from China's Cabio Biotech (688089.SS), a supplier for multiple infant formula manufacturers, including Nestle, Danone SA, and Lactalis. French authorities have identified Cabio Biotech as the origin of the contaminated arachidonic acid oil (ARA), the ingredient found to be the source of contamination. Shares in Cabio Biotech have seen a notable decline, dropping around 18% this year amid the ongoing scrutiny.
Market Reaction and Regulatory Landscape
Despite the expanded recall, market analysts had largely anticipated that the major players, Nestle and Danone, would not face further significant withdrawals following the updated EU limits. Nestle's shares showed resilience, trading 1.6% higher by 1344 GMT, while Danone's stock gained 1.3%, indicating investor confidence may be returning as the scope of contamination becomes clearer.
Investigation into Infant Deaths
Adding a layer of concern, French investigators are currently examining a potential connection between two infant fatalities and the recalled Guigoz formula. Authorities and Nestle maintain that there is no definitive evidence linking the deaths to the product thus far, with results from this investigation anticipated in the coming days. 
