Then they came for our Marmite: Tesco price row with Unilever

Unilever is moving its HQ to London, but not for the reason you might think
Unilever is moving its HQ to London, but not for the reason you might think

A battle over the price of many popular household items is the latest front in the post-Brexit referendum UK

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13 October 2016

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Dozens of beloved household brands are disappearing from Tesco outlets across the UK today as the retailer faces off with manufacturing giant Unilever over price increases.

Unilever, which owns popular products such as Hellman’s Mayonnaise, Comfort fabric softener and love-it-or-hate-it spread Marmite, moved to increase prices to offset losses against the falling pound, a strategy which Tesco – Unilever’s biggest client – resisted.

At the time of writing, Unilever products are said to be running low in Tesco stores as restocking runs have been suspended. In a statement, Unilever’s CFO Graeme Pitkethly said that the company “cares deeply” about its products being affordable for consumers, and that the increases they were attempting to implement were “substantially less than we would need to cover the cost on our own profitability”.

According to shopper research agency Shoppercentric, Tesco needs to be mindful of this row in the face of its competition, especially the discounters who don’t deal with Unilever at all. “Unilever’s portfolio is big enough to make this a very difficult decision for Tesco,” says managing director Danielle Pinnington. “Meanwhile in the short term, shoppers can go elsewhere if they’re after specific products – until those alternative retailers accept the price increase or run out of stock too.

“If it is all about the fundamentals of who absorbs the cost of Brexit then this is not going to be easy,” says Pinnington. “It will be interesting to see which business breaks first. If it is Tesco then ultimately shoppers will take the hit.”

 

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