The recall, which was announced on December 4, is only for Slim-Fast products in cans and does not affect its powdered shakes or nutrition bars.
The U.S. Food and Drug Administration (FDA) said in a prepared statement that the recall was brought about after the company’s internal quality testing revealed the potential contamination. The recall could end up involving more than 10 million cans and cost the company thousands in lost revenues. Slim-Fast sales totaled more than $130 million in the mass market alone in 2008, according to Chicago-based market research firm Information Resources Inc. (IRI).
The recall may also negatively affect sales of the company’s other products, which were already underperforming prior to the recall. Year-over-year sales were down 12% in the U.S. mass market in 2008 (excluding Wal-Mart), according to IRI. The products continued to underperform through the first half of 2009, with sales declines of 11% through July 11, 2009.
This is the second recall Unilever will have to overcome in 2009. The company recalled three of its Slim-Fast bar products due to potential contamination with peanuts which were recalled by the Peanut Corporation of America (PCA). The company posted 1% global sales growth in 2008, but will be challenged to keep its balance sheet positive this year.
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