Nestlé’s Baby Food Business Under Pressure—Are Sugar and Safety Issues Raising New Questions?

Nestlé’s $70 Billion Baby Food Business Faces Growing Trust Challenges

Nestlé’s global infant nutrition business, valued at roughly $70 billion, is facing renewed scrutiny after a combination of product formulation controversies and a global recall raised questions about safety standards and consumer trust. The Swiss food major, which remains the world’s largest player in infant nutrition, is confronting what analysts describe as a sensitive reputational phase in a category where consumer confidence is critical and slow to rebuild once damaged.

The twin pressures — criticism over added sugar in baby foods sold in emerging markets and a large-scale infant formula recall linked to contamination risks — have increased regulatory and public scrutiny across multiple markets. Although the operational impact varies by geography, industry experts note that infant nutrition is among the most reputation-sensitive categories in the food industry, where even limited controversies can influence long-term demand and brand perception.

India has emerged as a central market in this narrative, given its importance to Nestlé’s growth strategy and its position as one of the largest markets for Cerelac, the company’s flagship infant cereal brand.

Here’s What Happened And Why Consumers And Investors Reacted

The latest scrutiny around Nestlé’s infant nutrition division stems from two separate developments that unfolded over the past two years, both of which attracted significant attention from regulators and consumer groups.

Key developments include:

• Controversy over added sugar in infant products sold in emerging markets

• Global recall of certain infant formula batches in 2026

• Increased regulatory monitoring of baby food standards

• Reformulation of Cerelac products in India

• Ongoing reputation risks despite limited operational impact

The sugar controversy raised concerns about nutritional standards across different regions, while the recall highlighted supply chain safety risks. Together, these developments have kept the infant nutrition business under close scrutiny.

Although Nestlé India confirmed that local products were not affected by the recall, market participants note that sentiment toward baby food brands often reacts to global developments rather than purely local events.

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Sugar Content Controversy Put Nestlé Under Global Spotlight

The first major challenge emerged in 2024 following an investigation conducted by Public Eye and the International Baby Food Action Network (IBFAN), which found that Nestlé sold infant food products containing added sugar in several emerging markets, including India, Nigeria and the Philippines.

The investigation noted that similar products sold in parts of Europe did not contain added sugar, prompting criticism from public health experts and consumer groups who argued that nutritional standards should be consistent across markets.

IBFAN, which includes more than 270 public interest organisations across 168 countries, works globally to reduce infant and child mortality and has long monitored baby food marketing practices.

Nestlé initially defended its practices, stating that product formulations complied with local regulatory requirements. However, criticism continued from nutrition experts and advocacy groups.

In response, Nestlé reformulated its Indian product range and by late 2025 removed added sugar from 14 variants of Cerelac. The company also introduced clearer product labeling, including “No Added Sugar” claims to address consumer concerns.

Despite these changes, IBFAN later reported that Nestlé baby food products sold in parts of Africa still contained relatively high levels of added sugar, indicating that reformulation efforts remain ongoing globally.

Infant Formula Recall Added Safety Concerns

The second major challenge emerged in 2026, when Nestlé announced a large global recall of certain infant formula products after detecting cereulide, a toxin associated with Bacillus cereus contamination, in some batches.

The contamination was traced to ARA oil supplied by a third-party vendor, prompting Nestlé to terminate its relationship with the supplier and tighten quality-control procedures across its production network.

The recall resulted in an estimated financial impact of approximately 185 million Swiss francs, primarily related to product write-offs and returns.

Industry observers note that safety-related recalls in infant nutrition typically receive intense public attention because of the vulnerability of the consumer base and the strict safety standards expected by regulators and parents alike.

Nestlé India Remains Operationally Unaffected

Nestlé India clarified in January 2026 that the global recall did not affect products sold in the country, as infant nutrition products in India are manufactured domestically and comply with local regulatory standards.

The company stated that:

“All infant formula sold in India is produced locally and complies with FSSAI regulations.”

Local production insulated the Indian market from supply-chain disruptions linked to the recall. However, analysts note that reputational issues can still influence consumer sentiment even when products remain unaffected.

Indian regulators have begun reviewing infant food standards following the sugar controversy, and Nestlé has accelerated product reformulations and labeling improvements in response to heightened scrutiny.

Despite these concerns, Nestlé India’s broader product portfolio remains stable. The company’s flagship Maggi noodles brand continues to sell roughly one crore packets daily, indicating sustained consumer demand across core product categories.

Infant Nutrition Remains A Strategic Growth Business For Nestlé

Globally, Nestlé continues to hold a leading position in infant nutrition with more than 20 percent market share, making it the largest player in the segment. The infant nutrition business forms part of the company’s Nutrition and Health Science division, which contributed approximately 17 percent of total group revenue in 2025.

Industry analysts note that India remains a critical long-term growth market for the company due to rising incomes, urbanisation and increasing demand for packaged nutrition products.

Even so, trust-related issues in infant nutrition categories can influence:

• Doctor recommendations

• Retailer confidence

• Consumer loyalty

• Long-term market share

Market participants say that restoring trust often requires sustained product improvements and transparent communication over multiple years.

Industry-Wide Scrutiny Intensifies Across Baby Food Companies

The recent developments affecting Nestlé reflect broader scrutiny across the infant nutrition industry rather than company-specific challenges alone.

Competitors such as Danone and Reckitt also adapt product formulations to local regulatory standards, and similar differences exist across markets for many global food companies.

However, consumer groups have intensified pressure on the entire sector. Dutch consumer organisation Foodwatch has filed complaints in France against several manufacturers including Nestlé, Danone and Lactalis, raising concerns about supply-chain transparency and product traceability.

Regulatory oversight is also tightening globally. In the United States, the Food and Drug Administration (FDA) introduced a national infant formula safety strategy in 2025 following shortages triggered by the Abbott Laboratories recall in 2022.

The plan includes:

• Enhanced pathogen monitoring

• Faster disclosure of safety data

• Stronger quality controls

• Improved supply-chain oversight

What This Means For Investors And The Market

For investors, the developments highlight the importance of reputational risk in consumer-facing sectors such as food and healthcare. Even when financial impact is limited, controversies in sensitive product categories can influence valuation multiples and growth expectations.

Potential market implications include:

• Increased regulatory oversight

• Higher compliance costs

• Greater focus on product transparency

• Longer brand-rebuilding cycles

Analysts note that Nestlé’s infant nutrition business remains structurally strong despite recent challenges. However, maintaining consumer trust will remain a key priority as the company navigates a more demanding regulatory and consumer environment.

While India has not been directly affected by the recall, the country remains one of the most closely watched markets for Nestlé’s infant nutrition strategy, making reputation management particularly important for the company’s long-term growth trajectory.