You are here: Home » Reuters » News
Business Standard

Tesco, Unilever settle prices row after pound's Brexit dive

Reuters  |  LONDON 

By James Davey and Martinne Geller

(Reuters) - Britain's biggest retailer, , settled a pricing row with after halting online sales of goods produced by the Anglo-Dutch giant in a dispute caused by a plunge in the pound since Britons voted to leave the EU.

The dispute between and one of the world's largest consumer goods companies was a first clear sign for consumers of the turbulence unleashed by the Brexit vote and of how it could hurt them.

Products such as Persil washing powder, Ben & Jerry's ice cream and Marmite - a brown yeast-extract spread with a like-it-or-loathe-it reputation - had been unavailable on the website of Britain's largest online grocer on Thursday.

Both sides declared the spat over on Thursday. "We're pleased this situation has been resolved to our satisfaction," a spokesman said. also said the supply situation in and Ireland had been successfully resolved.

The June 23 vote to leave the EU took many investors and company executives by surprise, unleashing the biggest one-day fall in sterling against the dollar.

The pound's fall -- it is down 19 percent against the U.S. currency and about 16 percent against the euro -- has left suppliers and retailers battling for profits as imported goods become more expensive.

That fight appeared to spread to supermarket shelves. Supervalu, Ireland's largest supermarket, said it was also holding negotiations with over pricing and could "experience some supply issues on certain products".

Bruno Monteyne, a former senior executive who is now an analyst at Bernstein, said has typically one to two weeks' stock.

"While politicians can deny reality, a shampoo produced on the continent is now 17 percent more expensive," he said. "This isn't about or but about all UK retailers and suppliers."

and stock fell 2.2 and 3.5 percent respectively.

High street stalwart WH Smith said separately it would look to consolidate factories and negotiate better with suppliers to cut costs.

"If people are worried about losing Marmite from Tesco, wait until they find out about jobs...," said Wes Streeting, a lawmaker from the opposition Labour Party who backed the Remain campaign in the June 23 referendum.

"MARMITEGATE"

The pricing row reflected the tensions building throughout the system, with the one retailer big enough to push back against Unilever's demands and one of the only suppliers powerful enough to stand its ground.

The standoff dominated the news in on Thursday, with "Marmitegate" trending on Twitter and "Marmite Wars" splashed on the front pages. The Daily Mail dubbed it "Brexit Blackmail.

It also has a personal dimension as boss Dave Lewis was previously a senior executive at Unilever, where his radical overhaul of the firm's businesses won him the nickname "Drastic Dave".

An executive at a rival consumer goods company that has not pushed for UK price increases said it was "absolutely brilliant positioning" by and no coincidence that the news broke on Wednesday, the eve of publishing financial results showing better-than-expected sales growth due to pricing.

"This makes Dave Lewis look like a hero defending consumers," the person said.

AGGRESSIVE

Two people familiar with the situation said had demanded 10 percent rises in the it charges Britain's big four supermarkets -- Tesco, Sainsbury's , Asda and Morrisons -- across a wide range of goods.

One said no other big consumer goods company had been as aggressive as on price demands while the second source said they had protested against Unilever's demands as some of the products were made in Britain.

The sources said two of the big four were still weighing whether to accept the rises or scrap some products.

Chief Financial Officer Graeme Pitkethly said the increases were "substantially less" than what was needed to cover the hit from the pound's fall. "We are confident that this situation will be resolved pretty quickly," he said.

is rebuilding itself after a 2014 scandal when it acknowledged overstating profits and pressuring its suppliers into driving down prices. Last week Lewis hailed a transformed relationship with suppliers as a factor in the grocer reporting a 60 percent rise in first-half profit.

But he indicated it was not a given that suppliers should be able to recoup the cost of the falling pound as they had not always passed on benefits when sterling was much stronger.

Most analysts and economists believe sterling's slump will lead to higher grocery prices, following years of deflation because of a price war between the big chains.

(Additional reporting by Kylie MacLellan and Helen Reid, Writing by Kate Holton, Editing by Anna Willard, Timothy Heritage and David Stamp)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

Tesco, Unilever settle prices row after pound's Brexit dive

LONDON (Reuters) - Britain's biggest retailer, Tesco , settled a pricing row with Unilever after halting online sales of goods produced by the Anglo-Dutch giant in a dispute caused by a plunge in the pound since Britons voted to leave the EU.

By James Davey and Martinne Geller

(Reuters) - Britain's biggest retailer, , settled a pricing row with after halting online sales of goods produced by the Anglo-Dutch giant in a dispute caused by a plunge in the pound since Britons voted to leave the EU.

The dispute between and one of the world's largest consumer goods companies was a first clear sign for consumers of the turbulence unleashed by the Brexit vote and of how it could hurt them.

Products such as Persil washing powder, Ben & Jerry's ice cream and Marmite - a brown yeast-extract spread with a like-it-or-loathe-it reputation - had been unavailable on the website of Britain's largest online grocer on Thursday.

Both sides declared the spat over on Thursday. "We're pleased this situation has been resolved to our satisfaction," a spokesman said. also said the supply situation in and Ireland had been successfully resolved.

The June 23 vote to leave the EU took many investors and company executives by surprise, unleashing the biggest one-day fall in sterling against the dollar.

The pound's fall -- it is down 19 percent against the U.S. currency and about 16 percent against the euro -- has left suppliers and retailers battling for profits as imported goods become more expensive.

That fight appeared to spread to supermarket shelves. Supervalu, Ireland's largest supermarket, said it was also holding negotiations with over pricing and could "experience some supply issues on certain products".

Bruno Monteyne, a former senior executive who is now an analyst at Bernstein, said has typically one to two weeks' stock.

"While politicians can deny reality, a shampoo produced on the continent is now 17 percent more expensive," he said. "This isn't about or but about all UK retailers and suppliers."

and stock fell 2.2 and 3.5 percent respectively.

High street stalwart WH Smith said separately it would look to consolidate factories and negotiate better with suppliers to cut costs.

"If people are worried about losing Marmite from Tesco, wait until they find out about jobs...," said Wes Streeting, a lawmaker from the opposition Labour Party who backed the Remain campaign in the June 23 referendum.

"MARMITEGATE"

The pricing row reflected the tensions building throughout the system, with the one retailer big enough to push back against Unilever's demands and one of the only suppliers powerful enough to stand its ground.

The standoff dominated the news in on Thursday, with "Marmitegate" trending on Twitter and "Marmite Wars" splashed on the front pages. The Daily Mail dubbed it "Brexit Blackmail.

It also has a personal dimension as boss Dave Lewis was previously a senior executive at Unilever, where his radical overhaul of the firm's businesses won him the nickname "Drastic Dave".

An executive at a rival consumer goods company that has not pushed for UK price increases said it was "absolutely brilliant positioning" by and no coincidence that the news broke on Wednesday, the eve of publishing financial results showing better-than-expected sales growth due to pricing.

"This makes Dave Lewis look like a hero defending consumers," the person said.

AGGRESSIVE

Two people familiar with the situation said had demanded 10 percent rises in the it charges Britain's big four supermarkets -- Tesco, Sainsbury's , Asda and Morrisons -- across a wide range of goods.

One said no other big consumer goods company had been as aggressive as on price demands while the second source said they had protested against Unilever's demands as some of the products were made in Britain.

The sources said two of the big four were still weighing whether to accept the rises or scrap some products.

Chief Financial Officer Graeme Pitkethly said the increases were "substantially less" than what was needed to cover the hit from the pound's fall. "We are confident that this situation will be resolved pretty quickly," he said.

is rebuilding itself after a 2014 scandal when it acknowledged overstating profits and pressuring its suppliers into driving down prices. Last week Lewis hailed a transformed relationship with suppliers as a factor in the grocer reporting a 60 percent rise in first-half profit.

But he indicated it was not a given that suppliers should be able to recoup the cost of the falling pound as they had not always passed on benefits when sterling was much stronger.

Most analysts and economists believe sterling's slump will lead to higher grocery prices, following years of deflation because of a price war between the big chains.

(Additional reporting by Kylie MacLellan and Helen Reid, Writing by Kate Holton, Editing by Anna Willard, Timothy Heritage and David Stamp)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Tesco, Unilever settle prices row after pound's Brexit dive

By James Davey and Martinne Geller

(Reuters) - Britain's biggest retailer, , settled a pricing row with after halting online sales of goods produced by the Anglo-Dutch giant in a dispute caused by a plunge in the pound since Britons voted to leave the EU.

The dispute between and one of the world's largest consumer goods companies was a first clear sign for consumers of the turbulence unleashed by the Brexit vote and of how it could hurt them.

Products such as Persil washing powder, Ben & Jerry's ice cream and Marmite - a brown yeast-extract spread with a like-it-or-loathe-it reputation - had been unavailable on the website of Britain's largest online grocer on Thursday.

Both sides declared the spat over on Thursday. "We're pleased this situation has been resolved to our satisfaction," a spokesman said. also said the supply situation in and Ireland had been successfully resolved.

The June 23 vote to leave the EU took many investors and company executives by surprise, unleashing the biggest one-day fall in sterling against the dollar.

The pound's fall -- it is down 19 percent against the U.S. currency and about 16 percent against the euro -- has left suppliers and retailers battling for profits as imported goods become more expensive.

That fight appeared to spread to supermarket shelves. Supervalu, Ireland's largest supermarket, said it was also holding negotiations with over pricing and could "experience some supply issues on certain products".

Bruno Monteyne, a former senior executive who is now an analyst at Bernstein, said has typically one to two weeks' stock.

"While politicians can deny reality, a shampoo produced on the continent is now 17 percent more expensive," he said. "This isn't about or but about all UK retailers and suppliers."

and stock fell 2.2 and 3.5 percent respectively.

High street stalwart WH Smith said separately it would look to consolidate factories and negotiate better with suppliers to cut costs.

"If people are worried about losing Marmite from Tesco, wait until they find out about jobs...," said Wes Streeting, a lawmaker from the opposition Labour Party who backed the Remain campaign in the June 23 referendum.

"MARMITEGATE"

The pricing row reflected the tensions building throughout the system, with the one retailer big enough to push back against Unilever's demands and one of the only suppliers powerful enough to stand its ground.

The standoff dominated the news in on Thursday, with "Marmitegate" trending on Twitter and "Marmite Wars" splashed on the front pages. The Daily Mail dubbed it "Brexit Blackmail.

It also has a personal dimension as boss Dave Lewis was previously a senior executive at Unilever, where his radical overhaul of the firm's businesses won him the nickname "Drastic Dave".

An executive at a rival consumer goods company that has not pushed for UK price increases said it was "absolutely brilliant positioning" by and no coincidence that the news broke on Wednesday, the eve of publishing financial results showing better-than-expected sales growth due to pricing.

"This makes Dave Lewis look like a hero defending consumers," the person said.

AGGRESSIVE

Two people familiar with the situation said had demanded 10 percent rises in the it charges Britain's big four supermarkets -- Tesco, Sainsbury's , Asda and Morrisons -- across a wide range of goods.

One said no other big consumer goods company had been as aggressive as on price demands while the second source said they had protested against Unilever's demands as some of the products were made in Britain.

The sources said two of the big four were still weighing whether to accept the rises or scrap some products.

Chief Financial Officer Graeme Pitkethly said the increases were "substantially less" than what was needed to cover the hit from the pound's fall. "We are confident that this situation will be resolved pretty quickly," he said.

is rebuilding itself after a 2014 scandal when it acknowledged overstating profits and pressuring its suppliers into driving down prices. Last week Lewis hailed a transformed relationship with suppliers as a factor in the grocer reporting a 60 percent rise in first-half profit.

But he indicated it was not a given that suppliers should be able to recoup the cost of the falling pound as they had not always passed on benefits when sterling was much stronger.

Most analysts and economists believe sterling's slump will lead to higher grocery prices, following years of deflation because of a price war between the big chains.

(Additional reporting by Kylie MacLellan and Helen Reid, Writing by Kate Holton, Editing by Anna Willard, Timothy Heritage and David Stamp)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard