Dutch Rusk managing director Willem Van de Geest, of Nelson, said the Stoke confectionery company imported 7200 bags of mixed gummy lollies, called Dragon Sweets, from a Chinese manufacturer about six weeks ago.
The lollies were distributed to shops in the lower South Island.
About two weeks later, complaints started coming in about the lollies, Mr Van de Geest said.
He was unaware ''inappropriate'' lollies were inside the bags.
''You have to look at it two or three times to think that doesn't look right.''
The offensive lolly was a gummy bear, and not a gummy baby, he said.
The lollies were a ''one-off'' and he had recalled and dumped thousands of bags.
''It won't happen again.''
Mr Van de Geest said he had imported lollies from around the world for 25 years and an offensive lolly had never been included in a mix before.
The manufacturers had sent him a letter apologising for the mistake and had refunded some money.
The lollies were originally designed for sale in England and were not considered offensive in Asia.
In Asia, the shape was considered a sign of fertility and health, he said.
''They wouldn't even blink an eyelid. We see it as offensive. We don't mind a hand or a foot being part of a lolly but we object to a breast or a penis.''
He had apologised to Mr Aburn and offered him some ''appropriate'' lollies for free.
Moyles Supervalue Supermarket owner John Moyle said he had not received any complaints from customers about the lollies.
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