Shares in Dairy Crest slipped 2 per cent in early trading after the milk and cheese group said it was withdrawing two million tubs of its Clover butter following the discovery of mould.

One analyst estimates the impact of the recall to be £5 million. Dairy Crest would not comment on total costs but said it would pay out £1 million, with insurance covering the rest.

Shares in Dairy Crest fell 14p to 687p on the news.

Dairy Crest, which blamed the growth of the mould on “an intermittent fault in the production process”, said the recall would affect all sizes of tubs, and best before dates up until August 10, 2007.

“We have discovered that the product can develop an unpleasant taste before the end of its shelf life due to the development of a mould most commonly found in blue cheeses,” said the company in a statement.

Dairy Crest added that no other products had been affected by the recall. The company ordered the spread to be removed from supermarket shelves and to be returned by consumers, after 17 people complained of feeling sick after eating the spread, and the company received 130 related complaints in the past week.

The dairy group said it had ceased production at its Shropshire factory until the problem was resolved. It added that it was "too early" to quantify the financial impact of the recall.

Panmure Gordon said the spreads divisions accounts for about 25 per cent of Dairy Crest's operating profits. Analysts have estimated that the total cost of the recall would touch £5 million.

To get a refund, Clover consumers should phone the UK consumer careteam on 020 8288 2008. Or email consumer@clover.org.uk

For more information about the recall of Clover and refunds click here

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts