TESCO AND UNILEVER GO TO WAR OVER THE POST-BREXIT COST OF MARMITE
Tesco has stopped selling dozens of its most famous household brands to its online shoppers because of a dispute with its biggest supplier, Unilever. Included are Marmite, PG Tips tea, Pot Noodles and Surf washing powder.
The row is said to have developed when Unilever – which says it faces higher costs because of the fall in sterling – attempted to increase wholesale prices.
The products are still being sold in stores but Tesco said its shelves were running short of several brands. It said it was “currently experiencing availability issues on a number of Unilever products”.
“We hope to have this issue resolved soon,” the company added. However, it did not indicate when that might be.
Sterling has dropped by 16% against the euro since the UK’s Brexit vote. Unilever is the UK’s biggest food and grocery manufacturer with many famous brand names.
It has declined to comment on the dispute with Tesco.The products currently absent from Tesco’s website also include Comfort fabric conditioner, Hellmann’s mayonnaise and Ben & Jerry’s ice cream.
Negotiations over price between retailers and their suppliers are a constant feature of the industry, but those discussions rarely lead to a public argument and product de-listing.
“Clearly the scale of the negotiation is much bigger than usual, but so is the event. Brexit-sized events are rare,” said Bruno Monteyne, an analyst at Bernstein.
“This is such a large event that it may simply be that the two gorillas on both sides have decided to go through the motions of the negotiation on behalf of the industry. This isn’t about Tesco or Unilever but about all UK retailers & suppliers.”
On Thursday Unilever released a trading update for the third quarter, which showed a growth in underlying sales of 3.2%.
Unilever said that conditions in European markets remained “challenging”.
Unilever and Tesco shares were both down 2% in early trading in London.