When a crisis hits a company, how it responds is crucial. Not just in the hours and days that follow, but in the weeks and months after the headlines have subsided. Stakeholder trust and brand reputation can be damaged in an instant and can be difficult to rebuild if the response is slow, unclear or overly defensive.
Nestlé and Danone recently issued recalls over potentially contaminated batches of baby formula. The scandal highlights the importance of clear, swift and transparent communications to maintain trust. But as a ‘high-risk’ consumer product category, any mistakes are not just brand damaging. They could have devastating consequences for consumers who, understandably, have no tolerance for failure.
Despite the fragile nature of the category, the industry is no stranger to product failures and ethical controversy. Previous safety crises range from large-scale contamination events, such as the 2008 melamine adulteration scandal in China that harmed a large numbers of infants, to major recalls in Europe such as Lactalis’ 2017–18 salmonella-linked infant formula recall.
For Nestlé, Danone, Lactalis, Vitagermine and Hochdorf, the brands affected during this latest scandal, the fallout will be felt not only in the baby formula market. It may also damage international reputations and trust across wider portfolios, including both high- and low-risk categories.
What is the right response?
It’s no surprise that speed is of the essence, particularly where there is potential risk to life. But just as important as the immediacy of action is the level of communication, transparency and reparation provided.
A typical response should begin as soon as risk is credible and with rapid containment. This includes the withdrawal and/or recall of affected products and setting up a public information hub that is easy to find from the affected brand’s homepage.
Information design also matters. Consumers need clear batch identifiers, practical guidance, and low-friction contact routes. Rather than fixed timelines, UK guidance emphasises communicating withdrawals and recalls as soon as possible to be effective, alongside clear instructions and support. From a branding perspective, this is trust repair work: the organisation must reduce uncertainty quickly and credibly.
In the case of baby formula and other high-risk products, as well as setting out the steps which are being taken now, it’s paramount to share the plan of what is being put in place to ensure this doesn’t happen again. The public want to be reassured that lessons are learnt. Transparency of future plans will be key in maintaining trust and showing accountability and positive action from a negative situation.
The response to this type of crisis is long-term when it comes to managing brand reputation. Data should be regularly collected from consumers to monitor sentiment and understand the immediate and ongoing impact on brand perception. Alongside reviewing supply chain processes and operational procedures, organisations can use this insight to make positive changes so future failings can be eliminated at every stage.
Did Nestlé and Danone hit the mark?
Taking a closer look at the response from two of the biggest brands caught up in the scandal, we see a difference in approach.
Nestlé seem to have created a well-crafted response, which we would expect from a brand versed in managing this type of crisis. The company website provides clear and comprehensive information about what has happened, how it is being fixed and what support is available for those affected.
What will stand the brand in good stead with consumers is the tone taken in its communications. It is family and human centred, using accessible language and focussing on those affected. A timeline of the response gives a clear update of key milestones. A video statement from the CEO shows the high priority that the company has placed on resolving the issue. The ability to contact the company directly makes it easy for consumers to get it touch.
Danone on the other hand seem to have taken a more formal, brand-first approach to their communications which leans more heavily on corporate framing. The website copy and media statement focuses on the values of the brand and not on the consumer. There is no direct signpost on its website to contact the company for further information or support.
Danone was also slower to recall affected products, with Nestlé the first to announce the issue and that it would be pulling affected batches from sale. With analysts suggesting that infant formula accounts for approximately 21% of Danone’s group revenues and around 5% for Nestlé, the financial impact for both brands could be severe if the response is not effective or proportionate. Both brands experienced a plunge in share prices in the immediate days following the news, with Nestlé fairing slightly better in the fallout.
What lessons can other brands learn?
High-risk product categories need quick action. Consumers don’t want to be kept in the dark or feel like they aren’t being given the full picture. Failing to produce safe baby formula, like other products which have a direct impact on life, has far greater consequences for consumer trust than issues affecting perceived low-risk categories such as haircare. The reason being that these brand names operate as shortcuts for safety judgments when consumers are making purchasing decisions, so any failure undermines the very basis on which choices are made.
As we can see with Nestlé and Danone, one product failure can impact the stability of a whole portfolio and lead to knock-on effects for brand perception and trust across an entire group. The response taken to resolve situations is where loyalty and trust is won and lost.
Only time will tell if the work to reassure consumers will be enough to secure Nestlé and Danone’s brand reputation in the long-term. What is clear is that history suggests this won’t be the last scandal to hit the sector. The brand that comes out on top will ultimately be the one who can learn the biggest lesson and eradicate future failures – full stop.
Dr Melisa Mete is a lecturer in marketing at Henley Business School.
When a crisis hits a company, how it responds is crucial. Not just in the hours and days that follow, but in the weeks and months after the headlines have subsided. Stakeholder trust and brand reputation can be damaged in an instant and can be difficult to rebuild if the response is slow, unclear or overly defensive.
Nestlé and Danone recently issued recalls over potentially contaminated batches of baby formula. The scandal highlights the importance of clear, swift and transparent communications to maintain trust. But as a ‘high-risk’ consumer product category, any mistakes are not just brand damaging. They could have devastating consequences for consumers who, understandably, have no tolerance for failure.
Despite the fragile nature of the category, the industry is no stranger to product failures and ethical controversy. Previous safety crises range from large-scale contamination events, such as the 2008 melamine adulteration scandal in China that harmed a large numbers of infants, to major recalls in Europe such as Lactalis’ 2017–18 salmonella-linked infant formula recall.
