The PepsiCo Inc. (NASDAQ:PEP) factory responsible for a massive recall of Quaker Oats products has come under scrutiny after U.S. regulators reportedly discovered that salmonella had been present at the facility for up to four years.

The Quaker Oats plant in Danville, Illinois, was closed in April, but the Food and Drug Administration (FDA) has warned that this closure may not be enough to prevent similar contamination issues at other locations, reported Bloomberg.

The recall, which began late last year and involved 22 million cases of Quaker Chewy Bars, has significantly impacted PepsiCo's financial results.

Sales in the first quarter for the Quaker Foods North America division fell by 24% to $593 million.

PepsiCo has indicated that the effects of the recall will continue to affect its performance at least through the first half of the year.

According to the FDA, a granola bar from the Illinois factory tested positive for salmonella in November. PepsiCo confirmed this finding more than two weeks later and initiated a product recall on December 14.

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The company noted in its recall notice that salmonella could cause serious, sometimes fatal infections in vulnerable populations, including young children, the elderly, and individuals with weakened immune systems.

FDA inspectors visited the Danville facility shortly after the recall began and found salmonella in a crack in the floor with food residue.

PepsiCo admitted that it had identified the same strain of salmonella in the facility since at least 2020, the report mentioned. Routine testing swabs conducted since June 2022 detected the bacteria 13 times, yet the source of contamination remained unidentified.

The FDA has urged PepsiCo to evaluate whether additional measures are needed at other factories to prevent persistent contamination.

PepsiCo stock has lost about 11% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Consumer Staples ETF (NYSE:IYK) and Consumer Staples Select Sector SPDR Fund (NYSE:XLP).

Price Action: PEP shares are trading higher by 0.68% at $164.70 in premarket at last check Thursday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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