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Leading food sector solicitors, Roythornes, estimate the Mars crisis could cost the firm millions.
Mars reportedly ordered a full recall of a number of chocolates, including Mars and Snickers bars as well as Milky Ways and Celebrations boxes across more than 50 countries after pieces of plastic were found inside a Snickers bar.
Now Roythornes, solicitors specialising in the food and drink sector, say the work involved in such a recall – the logistics of the recall itself, the PR impact of the crisis, potential legal costs as well as the potential repercussions in terms of lost sales and stock, could add up to an enormous financial hit.
Peter Bennett from Roythornes, said: “The financial impact of this recall could be astronomic.
“Simply getting the products off sale and the logistics and communications involved in that, along with writing them off and losing out on potential sales is one thing.
“However, the potential legal and PR costs along with the possible reputational damage and the effect that could have on investor relations and the value of the company is another thing altogether.
“We think the cost could potentially run to millions.
“It just goes to show the importance of being prepared for such eventualities and, as we learned from the Roythornes Product Recall survey last year, around a fifth of food and drink companies are operating without a product recall plan.
“That’s a scary prospect and I expect this incident may act as a wakeup call.”
In producing the Roythornes Product Recall Survey, members of the Fresh Produce Consortium, The Food and Drink Forum, the British Frozen Food Federation, the Artisan Food Trail and Tastes of Anglia were asked about their product recall policies and plans.
The results show that nearly a fifth of respondents (18.5%) didn’t have any product recall procedures in place and 60% do not include product recalls in their contractual agreements with suppliers.
In addition, 20% of participants that confirmed a product recall plan was in place, stated that they do not test the plan with trial recalls.
The research indicates that 73% of food and drink manufacturers and producers do not have media and communications protocols in place should a recall be required.
A full version of the research can be downloaded here.