Nestlé Runs 24 Hours to Avert Formula Shortages After Recall

Nestlé SA is ramping up production of infant formula to avert a shortage, after a contamination crisis led the Swiss foodmaker and rival producers Danone SA and Groupe Lactalis to recall hundreds of batches.

Five Nestlé factories in France, Spain, Germany, Switzerland and the Netherlands are running 24 hours a day to boost supply, particularly products for babies under the age of one, it said. A filing seen by Bloomberg showed Nestlé asked Swiss authorities for permission to conduct night and holiday work at its Konolfingen plant on Jan. 6, the day after the global recall began.

German manufacturer HiPP and Swiss firm Holle — neither impacted by the recall issue — also stepped up production to meet increased demand.

The moves come as the infant formula crisis drags into its third month, with products from at least five companies recalled in more than 60 countries. It began when Nestlé discovered bacteria that can cause cereulide — a toxin that can trigger sudden nausea and vomiting — at a factory, and that ballooned into the industry’s largest-ever recall.

Though only a handful of countries have definitively linked cases of babies falling sick to consuming the formula, the publicly-listed formula producers have been pummeled by investors reacting when a probe is announced.

Probes

Reports that French authorities are investigating whether a third baby’s death in the country is linked to consuming Nestlé infant formula sent both the Swiss company and Danone’s shares down again on Wednesday.

The French company’s stock rebounded Thursday after China said no poisoning cases linked to formula have been reported in the country. That’s particularly significant for Danone, which has a large presence there, according to Barclays.

Nestlé’s shares edged lower in early trading in Zurich on Friday, while Danone’s were little changed.

China’s market regulator also ordered formula makers to test for cereulide, a move that could help keep investor confidence intact given the critical role of a Chinese company in the industry. Cabio Biotech Wuhan Co. supplies ARA oil to formula makers including Danone and Nestlé. While neither company has named the supplier, it has since been confirmed that Cabio is the source of the cereulide contamination.

Meanwhile the production boost in Europe, coupled with a broader supply chain in the region, will likely mean it won’t face what happened in the US in 2022. Then, the temporary shutdown of an Abbott Laboratories factory led to empty shelves and panicked hoarding by parents.

Still, even a limited supply disruption can have a dramatic impact given the reluctance of many parents to switch brands, and especially the high dependence on a product with no alternative.

Infants under the age of one rely on breast milk or formula as their only complete sources of nutrition. Pediatricians warn that cow’s milk, plant-based drinks or homemade alternatives can cause serious health risks, making formula shortages especially concerning for mothers who can’t breastfeed.

Dominant Companies

“Global giants, or large local companies, dominate the infant milk market in every region,” Bloomberg Intelligence’s Duncan Fox and Diana Gomes said in a recent note, adding that Nestlé, Danone and Reckitt Benckiser Group’s Mead Johnson make up 35% of the global market. “That may make switching brands hard for parents if a company is slow to recall potentially dangerous product, and if babies are feeding well on their current brand.”

That has not stopped some producers from ramping up production. While Holle does not publish specific output numbers, its production boost is a response to the current market situation, spokesperson Karin Henke said.

“In order to counteract potential bottlenecks at an early stage, we have increased our production volumes as much as possible within the limits of the available raw materials,” she said.

Other producers including Danone and Groupe Lactalis, as well as British firm Nannycare and Dutch company FrieslandCampina, said they have not yet seen any signs of a shortage and are maintaining their existing output. German producer DMK is also maintaining production levels, as is Swiss manufacturer Hochdorf, one of the companies affected by the cereulide contamination recalls.

UK brand Kendamil and Arla Foods, the Danish-Swedish dairy cooperative, did not respond to requests for comment on their production.

Photograph: Nestle SA’s new production unit for probiotic infant formulas in Konolfingen, Switzerland, on Thursday, Sept. 1, 2011. Photo credit: Gianluca Colla/Bloomberg

Related:

Copyright 2026 Bloomberg.