On pickup, fully heals Isaac and gives him a temporary +21.6 damage up.
The damage upgrade scales down to 0 over the course of three minutes. Due to how the damage formula works, the damage upgrade scales down faster over time, starting at -~0.015 per half second and increasing to -~.1 per half second as the bonus approaches 0.
While Red Stew is active, Isaac gains an effect similar to Lusty Blood, gaining a small damage bonus every time he kills an enemy. This damage bonus persists between rooms and floors, allowing Isaac to sustain the temporary damage up for longer than he otherwise would if he manages to kill many enemies. This effect disappears once Red Stew's damage bonus completely runs out.
Due to the high amount of damage you temporarily gain, this item is extremely effective in Greed Mode, as all fights are done within the same room and you are easily able to make the most out of it.