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Unilever & Tesco close 'Marmitegate'

Niamh Michail

By Niamh Michail+

14-Oct-2016
Last updated on 14-Oct-2016 at 14:48 GMT2016-10-14T14:48:34Z

Unilever & Tesco close 'Marmitegate'

Unilever and Tesco have resolved their dispute over price increases for brands such as Marmite, but both are remaining tight-lipped over details of the deal.

The spat broke out after the UK’s retailing giant refused to shoulder price rises of around 10% announced by Unilever due to the sterling's plummeting post-Brexit value. 

Unilever products such as Ben & Jerry's ice cream and Persil washing powder were not available on Tesco's website, but it was the lack of the iconic British yeast-extract Marmite that made headlines.

Both parties have said the situation has been resolved although it is not clear if the price will go ahead and who will shoulder it if so.

Unilever issued a statement yesterday saying it was pleased to confirm that the supply situation had been successfully resolved. “We have been working together closely to reach this resolution and ensure our much-loved brands are once again fully available. For all those that missed us, thanks for all the love.”

A spokesperson for Tesco said the company always put its customers first and was pleased the issue had been resolved "to its satisfaction".

Euromonitor: 'Other companies will follow suit'

Senior food analyst at Euromonitor International, Pinar Hosafci, said although this is not the first time Tesco has pressured its suppliers to reduce prices – and it dropped bread manufacturer Kingsmill and Rachel Organics from its shelves as part of its price war – this time the trigger for the Marmite dispute was Brexit.  

“It is likely that other companies which are reporting in Euros, including the likes of Nestlé and Ferrero, will follow suit,” she said.

Neither Nestlé nor Ferrero responded in time for publication of this article to confirm Hosafci's predictions, but it has been widely reported that one of the fallouts from Brexit will be higher food prices.


BRC: ‘Everyone needs to play their part’

CEO of the British Retail Consortium Helen Dickinson said:"Retailers are firmly on the side of consumers in negotiating with suppliers and improving efficiencies in the supply chain to control the inflationary pressure that is building through the devaluation of the pound.

"However, years of falling shop prices and higher costs have left limited scope for retailers to continue absorbing this pressure, and everyone in the supply chain will need to play their part in maintaining low prices for consumers.”

But while multinationals such as Unilever – the fourth biggest packaged food company in the UK, according to Euromonitor – can afford to make demands, small and medium-sized companies are less able to absorb price rises, nor do they have much bargaining power.

As a result, they are likely to be hit much harder.

Hosafci had predicted that Tesco stood to lose more from the dispute as Unilever owns a number of power brands that hold leader positions in their respective categories. The company, which is co-headquartered in Rotterdam and London, has a 37% share in ice cream, 21% share in table sauces and, with its iconic Marmite brand, enjoys 85% of the yeast-based spread category.

Yet other analysts are suggesting Tesco may see its reputation bolstered by the dispute as it comes across as a champion for the people striving to protect them from rising food prices thanks to favourable coverage in national tabloid newspapers. Dave McCarthy, a food retail analyst at HSBC told The Guardian: “When was the last time you saw articles about Tesco as the shoppers’ champion?” 

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