Unilever defends ‘Brexit price rises’ as Marmite disappears from Tesco shelves

Unilever says the reported 10% price rise is aimed at offsetting the fall in value of the pound and that the issue at Tesco will be resolved “pretty quickly”.

Unilever has defended its decision to increase the price of a number of its household brands including Lynx, Marmite and Ben & Jerry’s, claiming it “cares deeply about customer affordability”.

The FMCG giant’s decision led to a barrage of media coverage after Tesco started removing listings of Unilever brands on its website. The grocer was reportedly asked by Unilever to raise the prices of its products by up to 10% in a bid to offset the higher cost of importing from abroad. Unilever is based in the Netherlands and report revenues in euros.

The BBC reports that other supermarkets have also been asked to increase prices, but Tesco is so far the only one to allow things to escalate so far.

Speaking on an investor call this morning (13 October), Unilever’s CFO Graeme Pitkethly said it was “pertinent” for the company to comment on the news, even though it does not like to talk about pricing in an individual market.

“It’s important to point out that we don’t set prices for consumers at the end of the day. We are in a devaluation-led cycle. We care deeply about customer affordability of our brands. As a consequence, price increases have landed with most of our customers. So much of the press covered it this morning, but we’re confident it will be resolved pretty quickly,” he said.

He added that “commodity cycles will come and go”, but that it is the combination of commodity prices and currency that shape the cost landscape in an individual market.

“The pricing decisions are taken by local teams. We’re frontline focused as we think the critical view of consumer affordability and being sensible is best done by people on the frontline of our business,” he added.

Retail consultant Richard Hyman believes that the Tesco/Unilever spat over cost inflation is “just the beginning” of retailers’ woes as Brexit leads to pressure on the bottom line.

“Today, the pound is around 17% below its referendum day value against the dollar. Who knows how the markets will rate the UK economy over the next few years but I don’t know anyone who expects the pound to regain that ground. Given that we import more than 60% of what we consume via retail (food and non-food combined), it is clear that we will be importing a material slice of inflation,” he says.

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  1. Jim Hodgkins 14 Oct 2016

    Who wins in Tesco v Unilever – Nearly everyone. Tesco got great publicity for defending prices and put out a warning, softening up consumers that they will go up soon but they are the good guys trying to defend against that; Unilever received huge “equivalent value of advertising” media coverage for marmite, consumers get the same prices for now. With hindsight, was this really a bitter dispute or a 24 hour promotion ?

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