Salmonella scare to cost Cadbury £20m

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The Independent Online

Cadbury Schweppes said today that the salmonella scare which led to the recall of more than one million chocolate bars will cost the firm £20 million.

Cadbury recalled seven ranges of chocolate bars at the end of June following a salmonella outbreak at one of its main factories in Marlbrook, Herefordshire.

The company said today that the recall cost it £5 million in reduced revenues but the total cost was 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.

The firm said: "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."

Despite the impact of the salmonella scare and the product recall, Cadbury today posted a 24 per cent hike in pre-tax profits of £402 million for the first half of the year.

Cadbury added that it expected full-year revenues to come in at the top end of expectations but added it was "still monitoring the trading impact of the UK recall".

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.

Cadbury blamed the contamination on a leaking pipe at its Marlbrook site and the Health Protection Agency has branded Cadbury's chocolate the most likely cause of an infection outbreak in more than 30 people.

One woman has threatened to sue the firm after coming down with the illness.

Since the HPA announcement, her law firm, Irwin Mitchell, has been contacted by several other people who believe Cadbury's chocolate gave them salmonella.

Cadbury said that while the whole UK confectionery market was down 7 per cent and the chocolate market was down 9 per cent in the last four weeks, its own chocolate sales were down about 14 per cent.

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."

He said the company did not have "a worst case scenario" in mind.