Unilever and Tesco Resolve Dispute

14 Oct 2016 --- Unilever has resolved its price war with Tesco and said Ben & Jerry's, Marmite and its other well known brands will be “once again be fully available” at the UK’s biggest supermarket. 

The consumer goods giant said: “Unilever is pleased to confirm that the supply situation with Tesco in the UK and Ireland has now 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.”

Tesco said: “We always put our customers first and we are pleased this has been resolved to our satisfaction.”

The quick resolution will be good news for both parties and brings an end to an argument over price after it emerged that Unilever had demanded a 10 percent price rise of its brands across the board, stopping deliveries to Tesco and leaving it low on items such as Pot Noodle.

Tesco's share price was up 2.6 percent today (Friday), while Unilever's was down 2.72 percent.

Yesterday, Unilever finance chief Graeme Pitkethly said the price rise was due to the fall in value of sterling, which had dropped by around 16 percent since the UK voted to leave the EU.

Speaking alongside the group's third quarter results, Pitkethly said: “In the UK, which accounts for five percent of turnover, prices should start to increase to cover the cost of imported goods due to weaker sterling.”

But analysts have warned of more disputes between suppliers and retailers ahead.

Speaking to the Press Association, Steven Dresser, retail analyst at Grocery Insight, said there was likely to be a round of price hikes early next year as retailers look to pass on higher costs once the festive season is out the way.

“No one wants to put prices up ahead of Christmas. Others may just wait until January,” he said.

“It's only going to get more painful,” he said, as supplier face increased costs of ingredients and subsequently put up prices.

Speaking to the Guardian, Bruno Monteyne, an analyst at Bernstein Research, said the publicity around the dispute helped explain the justification behind price rises and was beneficial to Tesco.

He said: “Tesco recognises that Unilever’s costs have gone up – there is no doubt about it – but they wanted to argue a little bit. The government doesn’t really want to publicise the negative impact of Brexit. Now Tesco can say ‘look how we fought for you’.”

Ian Wright, director general of the FDF, which represents Unilever in the UK, told the BBC’S Radio 4: “This is emblematic of what is come to this spat.”

“What we are seeing here is the first sign of a series of price increases which retailers are going to fight not to impose and manufacturers are going to seek to pass on because they have had a 20 percent increase  in the value of their ingredients and import costs.”

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