New Zealand infant formula maker a2 Milk Co. is recalling batches of product sold in the US after detecting a toxin linked to vomiting and diarrhea, marking its first brush with a contamination scare that has rattled the global industry.
Three batches of a2 Platinum USA-label formula have been recalled after manufacturer Synlait Milk Ltd. identified cereulide, a2 said. The recall, which began on May 1, impacts just the US and not the company's most lucrative market in China.
No confirmed incidents of infant illness or harm have been reported, it said.
The global baby formula market has been buffeted by concerns over tainted products, which accelerated in January when Nestlé SA widened a product recall after detecting cereulide - the same toxin identified a2's products - in an ingredient from one of its suppliers. Rival producers Danone SA and closely-held Groupe Lactalis have also recalled hundreds of batches in dozens of countries.
While a2 had until now avoided the safety concerns, the recall lands at a fragile moment for the company. Its shares have already slid almost a third over the past month after it cut revenue and earnings guidance, citing shipment delays to China partly linked to the Iran war.
A2's stock tumbled as much as 19% in Wellington, its biggest one-day decline since August 2024, before paring losses to around 10%.
The specific product being recalled has a different formulation to the formula sold in Australia, New Zealand, South Korea, Vietnam, as well as China, Sam Teeger, an analyst at Citigroup in Sydney, wrote in a note.
Still, "we see a risk that this recall could make its way on social media in China and cause damage to the brand," Teeger said. "We see risk that supply chain constraints may persist for longer than expected, and even when they are resolved it may not be easy or cheap for a2 to win back consumers who have switched to competitor brands."
China's customs administration said in a statement that none of the recalled products have been imported to the country through general trade channels. And, so far, Chinese social media users have shown little concern, with posters pointing to the distinctions in products sold in different locations.
A2 said its recall was initiated when cereulide was detected through additional testing by Synlait after New Zealand's Ministry for Primary Industries released new guidelines in mid-April. The probable source of cereulide is an ingredient in the affected product, it said.
The recall is in relation to a relatively small quantity of three batches comprising 63,078 tins of which an estimated 16,428 tins were sold to consumers, the company said. Importation rights ended on Dec. 31 last year and the product was discontinued and removed from sale prior to the recall.
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