Here’s what Mars order to recall chocolate bars across Europe could mean for the company

Mars Incorporated, one of the world’s largest confectionery and pet food manufacturers has recalled some of its products including the Mars, Snickers and Milky Way bars in over 50 countries across the world.

This comes after a piece of red plastic (part of a chocolate cover) was found in a Snickers chocolate bar in Germany, manufactured at the Mars factory in the southern town of Veghel in the Netherlands.

The recall, which is reported to be an “isolated incident” affects all Mars and Snickers products, Milky Way Minis and Miniatures as well as certain kinds of Celebrations confectionery boxes. Basically, every product with a “Mars Netherlands” label and best-before dates ranging from June 19, 2016 to Jan. 8, 2017. Notwithstanding, these dates may not be the same in every country, according to a statement issued on Tuesday by the company.

This is, however, not the first time Mars will be recalling its products. Even though this case may be different from other recalls like the Volkswagen scandal and the horsemeat saga associated with dishonesty and wide scale failure, it does not stop the company from having to deal with problems of trust afterwards.

Here’s what the recall could mean for Mars:

A heavy financial blow

The recall appears to be a precautionary measure for Mars however, it will have a significant financial cost attached which includes the loss of writing off products and from lost sales. In 2006, Cadbury’s recall of more than 1 million chocolate bars after a salmonella outbreak cost that company roughly 20 million pounds.

Mars currently has about a 12 percent share of the west European chocolate market with sales of about $33 billion in 2015. According to Alicia Forry, a consumer good analyst at Canaccord Genuity, Mars will likely to lose up to $2.5m (£1.8m) of sales over the next few months as a result of the recall. The estimate, however, rests on the assumption that it is a simple manufacturing fix, implying it could be more if it exceeds ‘just a manufacturing fix.’

Damaged reputation and headway for other manufacturers

Mars prides itself on having a $5 billion brand name in 29 separate chocolate products, including M&Ms, Twix and Dove. The recall of Mars products across European countries is not great timing for the company. Neil Saunders, an analyst at the Conlumino Retail Consultancy said, sales would be lost as a result of repetitional damage, and would be a concern over the short and medium term. Commenting on the recall, Paula Medina, 43 and her daughter, Sophie said, “Our trust has been shattered that’s for sure…there’s so much choice. I think we’ll take a break, and maybe go for something else in the future.”

In the meantime, other manufacturers like Easter, Mondelēz (maker of Cadbury) and Nestle (maker of KitKat), as well as Ferrero, could benefit positively from this recall.

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