Salmonella scare to cost Cadbury £20 millionBut chocolate firm's profits are still up
02 August 2006
The salmonella scare that forced Cadbury Schweppes to recall more than a million chocolate bars will cost the firm £20 million, it revealed today.
The chocolate giant recalled the bars in June because of salmonella contamination from a leaking pipe at one of its plants in Herefordshire.
The company said that the recall cost it £5 million in reduced revenues, a figure that is expected to rise to £20 million over the full year.
Cadbury said that in the last four weeks confectionery sales slumped 7 per cent in the UK, while its own market share was down 1.1 per cent.
It added: ‘While chocolate sales in the UK have been impacted by extremely high temperatures in the last four weeks, the product recall has also had an impact on performance.’
Damage to the brand
‘We have apologised to our consumers, customers and colleagues for any concerns caused and are implementing changes to our UK manufacturing and quality assurance processes so that this cannot happen again,’ it went on.
But despite the impact of the salmonella scare and the product recall, Cadbury today posted pre-tax profits of £402 million for the first half of the year, a 24 per cent increase on last year.
Among the chocolate bars taken off the shelves were Dairy Milk Turkish 250g, Dairy Milk Caramel 250g, Dairy Milk Mint 250g, Dairy Milk Eight Chunk and Dairy Milk 1kg.
All five chocolate bars are now back on the shelves although one of the other bars, Cadbury Freddo, has been withdrawn for good.
The Health Protection Agency has said that Cadbury's chocolate was the most likely cause of an infection outbreak in more than 30 people.
The company added that the £20 million it expected the outbreak to cost did not include future loss of sales through damage to the brand.
Chief executive Todd Stitzer said: ‘It is very difficult to quantify that. The first four weeks (since the recall) have been the hottest on record.’