Brands axed from Tesco after row with supplier Unilever demanding price rise

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at 2016.10.13
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Brands axed from Tesco after row with supplier Unilever demanding price rise

  • Unilever has stopped delivery of 200 much-loved products to Tesco stores
  • Manufacturer allegedly demanded 10% price rise – blaming post-Brexit era
  • But Tesco refused to pay the increase prompting Unilever to halt supplies
  • Persil, Marmite, Surf, Persil, Flora among the products pulled from shelves
  • Critics claim Unilever is ‘exploiting customers’ and ‘using Brexit as excuse’
  • The £2billion-a-year firm supported Remain group during EU referendum
  • Analysts questioning why it needs price rise when many goods are British 

Dave Burke

and
Emma Glanfield for MailOnline

and
Sean Poulter, Daily Mail Consumer Affairs Editor

Anglo-Dutch consumer goods manufacturer Unilever has been accused of ‘exploiting’ British shoppers after withdrawing more than 200 much-loved products from Tesco after the supermarket refused to agree to its 10 per cent price hike.

Critics claim the world’s largest consumer goods manufacturer, which makes an estimated £2billion profit a year, is ‘using Brexit as an excuse to raise prices’ after it proposed a 10 per cent rise on its products.

The firm, which heavily campaigned against Brexit in the lead-up to the EU referendum, claims it has been forced to increase prices as a result of the falling value of sterling post Brexit.

However, supermarket giants such as Tesco, have refused to pay the extra 10 per cent – prompting Unilever to halt deliveries to its stores.

It means popular products such as Marmite, Flora, Persil, Dove, PG Tips, Vaseline and Ben & Jerry’s are now no longer available on Tesco’s website and will not be restocked when supplies run out in stores.

The stand-off has left the supermarket facing a shortage of more than 200 brands including Surf detergent, Comfort fabric conditioner, Hellmann’s mayonnaise, Pot Noodle and Chicken Tonight. 

Tesco has refused to pay a 10 per cent price rise, prompting Unilever to halt deliveries to the supermarket giant. It means 200 much-loved brands have disappeared from Tesco website after the biggest consumer goods manufacturer refused to deliver them as the row wages on

Tesco has refused to pay a 10 per cent price rise, prompting Unilever to halt deliveries to the supermarket giant. It means 200 much-loved brands have disappeared from Tesco website after the biggest consumer goods manufacturer refused to deliver them as the row wages on

Persil products are among those now in short supply

Customers shopping for Marmite may be disappointed

Customers shopping for Persil and Marmite may be disappointed because of the dispute. More than 200 popular products will not be delivered to Tesco by Unilever until the row is resolved

Unilever appears to be blaming Brexit and the falling value of the pound, which means it is more expensive to import ingredients.

However, analysts say many of the products involved in the dispute – including Marmite which is made in Burton-upon-Trent, Staffordshire – are made in Britain with home produced ingredients.   

Unilever, which has so far declined to comment on the dispute, was among the businesses which warned about the dangers of a Brexit vote before the EU referendum, provoking allegations of scaremongering.

But critics say it is now using Britain’s decision to leave the European Union as an ‘excuse to raise prices’.

Tory MP Sir Gerald Howarth said: ‘I think it’s pretty outrageous that Unilever is seeking to exploit their customers using a fall in the value of the pound.’

Meanwhile, an industry source said: ‘Unilever is using Brexit as an excuse to raise prices, even on products that are made in the UK.’

Another grocery insider claimed Unilever is using the weak currency as a ‘smokescreen to raise prices’.

Taking a hard line: Tesco chief executive Dave Lewis worked for Unilever for 27 years

Taking a hard line: Tesco chief executive Dave Lewis worked for Unilever for 27 years

It is understood that Unilever has approached a number of the major retailers in an attempt to increase prices. 

Several supermarkets are understood to be embroiled in a row with the consumer goods firm although, so far, Tesco is the only chain thought to be affected by a mass withdrawal of products.

It recently boasted that its prices are down by six per cent compared with two years ago, saving average families more than £300 a year.

But bosses have been forced to lay off thousands of backroom staff, move its HQ and abandon the opening of new stores to cut costs. 

They are now determined not to allow suppliers to dictate price rises that will let budget chains poach customers. Aldi and Lidl do not face the same pressure as mainstream supermarkets, as they rely on own-label products rather than big brands.

The row is embarrassing for Tesco chief executive Dave Lewis, who previously held a top job at Unilever for 27 years. 

He recently told The Grocer magazine: ‘We would be very challenging with anybody who was thinking of taking an exchange rate move to justify a price increase just on the back of that alone.’

Pot Noodles are also among the brands affected by the dispute

Ice cream brand Ben & Jerry's may be hard to find on Tesco shelves until the dispute is resolved

Pot Noodle and Ben & Jerry’s ice cream may be hard to find on Tesco shelves until the dispute is resolved. Tesco is said to be refusing to pay the additional 10 per cent Unilever is demanding

Vaseline and Dove are two other brands to be pulled from Tesco website as the row continues

Vaseline and Dove are two other brands to be pulled from Tesco website as the row continues

Vaseline and Dove are two other brands to be pulled from Tesco website as the row continues

THE 200 BRANDS SHOPPERS WILL STRUGGLE TO FIND IN TESCO STORES UNTIL THE UNILEVER DISPUTE IS RESOLVED

Food and beverages: 

Alsa, Amino, Amora, Annapurna, Aromat, Becel, Ben & Jerry’s, Best Foods, Bertolli, Blue Band, Bovril, Breyers, Brooke Bond, Bru, Brummel & Brown, Buavita, Bushell’s, Calvé, Chicken Tonight, Choysa, Colman’s, Conimex, Continental, Country Crock, Darko, Delma, Du Darfst, Elmlea, Fanacoa, Flora, Fruco, Fudgsicle, Grom, Heartbrand, Hellmann’s, I Can’t Believe It’s Not Butter, Imperial Margarine, Jif, Joko, Kasia, Kecap Bango, Kissan, Klondike, Knorr, Lady’s Choice, Lan-Choo, Lao Cai, Lipton, Lipton Ice Tea, Lizano Sauce, Lyons, Maille, Maizena, Marmite, McCollins, Motions, Mrs. Filbert’s, Paddle pop, Pfanni, PG Tips, Phase, Planta, Popsicle, Pot Noodle, Promise, Rama, Rani, Red Rose Tea, Robertsons, Royco, Saga, Sana, Sariwangi, Scottish Blend, Sealtest, Slotts, Stork, Streets, Sunce, T2, Telma, Tortex, Tulipan, Turun sinappi, Unilever Food Solutions, Unox, Vaqueiro

Home and personal care: 

All, Ala, Andrelon, Aviance Cosmetics, Axe, Ayush, Baba, Badedas, Biotex, Block & White, Breeze, Brilhante, Brisk, Brylcreem, Caress, Cif, Citra, Clear, Clinic, Close-Up, Coccolino, Comfort, Cream Silk, Degree, DERO, Dimension, Dollar Shave Club, Domestos, Dove, Dove Spa, Dusch Das, Elidor, Eskinol, Fair & Lovely, FDS, Gessy, Glorix, Good Morning, Impulse, Ioma, Lakmé, Lever 2000, Lifebuoy, Linic, Lux, Lynx, Lysoform, Master, Matey, Minerva, Mist, Neutral, Noxzema, Omo, Origins, Organics, Pears Transparent Soap, Pepsodent, Persil, Pond’s, Prodent, Quix, Q-Tips, Radox, Rexona, Rinso, Robijn, Sedal, Shield, Signal, Simple, Skip, SR, St Ives, Suave, Sun, Sunlight, Sunsilk, Sure deodorant, Surf, Swan Soap, Thermasilk, Tholl, TIGI, Timotei, Toni & Guy, TRESemmé, Ultrex, Vaseline, Vibrance, Vim, Vinólia, Viso, Wheel, White Beauty, Williams, VO5, Xedex, zendium, Zhonghua, Zwitsal 

Bryan Roberts, a retail analyst at TCC Global, told The Guardian that Unilever’ s attempt to increase prices was not surprising and reflected attempts by a large number of supermarket suppliers to offset cost increases. He suggested there were likely to be more disputes between retailers and suppliers in the coming days.

‘A lot of suppliers are seeking to pass on price increases to retailers but in the current environment retailers are increasingly reluctant to take it. They want to keep prices as low as they can to increase their affordability against the competition,’ he said.

I think it’s pretty outrageous that Unilever is seeking to exploit their customers using a fall in the value of the pound 
Tory MP Sir Gerald Howarth

A source at another supermarket group said Unilever had threatened to cut off its entire supply unless it agreed to an across-the-board price increase of 10 per cent. He said the retailer would consider banishing Unilever products from its stores rather than comply with the ultimatum.

Unilever was among the businesses which warned Brexit could have a negative effect before the vote in June, provoking allegations of scaremongering.

Chief executive Paul Polman, along with former chief executives Patrick Cescau and Niall FitzGerald and former chairman Sir Michael Perry, sent a joint letter to employees effectively warning them of the dangers of a vote to leave.

It read: ‘It is not for us to suggest how people might vote… but in taking this hugely important and irreversible decision, we feel a responsibility to point out that Unilever in the UK, with its thriving operating company, international research centres, factories and global headquarters would, in our considered opinion, be negatively impacted if the UK were to leave the European Union.’ 

Lynx is one of the brands supplied by Unilever

PG Tips may be harder to find on Tesco shelves

Some of Britain’s best known brands are supplied by Unilever, which is in dispute with retail giant Tesco

MARMITE FALLS VICTIM TO UNILEVER V TESCO ROW 

British staple Marmite is one of the 200 items that has been taken off the virtual shelves at Tesco following a row with supplier Unilever over pricing.

Jars of Marmite are ‘currently not available’ on Tesco’s website.

Unilever demanded the prices of its products be increased in order to offset the cost of imported commodities following the recent fall of the pound, the Financial Times reported citing executives at numerous supermarket groups.

The dispute broke out following a turbulent few days for the pound, which last week plummeted against the dollar to its lowest level for 31 years.

Other Unilever products including PG Tips tea and Ben & Jerry’s ice cream were also unavailable on Tesco’s online store, but it was the sudden absence of Marmite which prompted national furore.

Accompanied by the motto ‘Love it or hate it’, the dark-coloured spread first hit the shelves more than a century ago from a factory still operating in Burton-upon-Trent, Staffordshire, England.

Made from spent brewer’s yeast, Marmite is usually spread on toast although the company says it can also be used as an ingredient for dishes such as bolognese and onion soup.

Mr Polman also previously told Channel 4 that a vote to Leave would mean hikes in import duties on items such as dairy products, leading to price rises that would affect consumers.

Citing the example of Wall’s Magnum ice cream, Mr Polman warned about trade restrictions, saying: ‘Undoubtedly if the UK were to Leave, the conditions will not be as good as if they stay in.’

But MPs have now condemned Unilever, saying the company is using Brexit as an excuse to exploit consumers. 

They warn it may damage its brand.

Sir Gerald Howarth told the Daily Telegraph: ‘I think it will be very damaging to the reputation of Unilever if they seek to use the fall in the pound to exploit the consumer.

‘Clearly products which are not dependent upon imports into the United Kingdom will not be affected by the fall in the value of the pound.

‘Consumers will switch to other products where companies aren’t seeking to fleece the consumer.’

The dispute came on a tumultuous day for the pound on the foreign exchanges, which at one point saw sterling lose almost one per cent of its value against the dollar during the course of exchanges in the House of Commons, before staging a rally.

Tesco last week revealed its half-year profits dropped by more than a quarter to £71million after being hit by the sector’s price war, although it recorded sales growth for a third quarter in a row.

Shoppers trying to buy any of the some 200 items affected from Tesco’s website yesterday were met with the message: ‘Sorry, this product is currently not available’.

Liberal Democrat leader Tim Farron hit out at the government and blamed the 'chaos' on Brexit

Liberal Democrat leader Tim Farron hit out at the government and blamed the ‘chaos’ on Brexit

A Tesco spokesman said: ‘We are currently experiencing availability issues on a number of Unilever products. We hope to have this issue resolved soon.’

Tesco previously had a significant rift with Premier Foods, the maker of Ambrosia, Oxo and Mr Kipling cakes, in 2011 when the supermarket refused to stock products after the supplier tried to pass on a cost hike.

Former chief executives of Tesco, Sainsbury’s, Asda, Morrisons, Marks & Spencer and B&Q all warned ahead of the EU referendum that a drop in the pound – coupled with supply chain disruption – would cause prices to spike.

The Tesco stand-off with Unilever came hours after former Sainsbury’s boss Justin King said shoppers should expect price rises after the fall in the value of the pound since the Brexit vote.

Mr King warned supermarkets would struggle to absorb the rise in the cost of importing goods because of the devalued pound, meaning consumers would face higher prices, The Guardian said.

Speaking at a conference in London on Wednesday, Mr King said: ‘Retailers’ margins are already squeezed. So there is no room to absorb input price pressures and costs will need to be passed on.’

He added: ‘No business wants to be the first to blame Brexit for a rise in prices. But once someone does, there will be a flood of companies because they will all be suffering.’

Liberal Democrat leader Tim Farron blamed the Government for the latest row, saying: ‘The chaos around Brexit is now hitting our supermarket shelves. This shows the Government don’t have a plan or even a clue.’

Earlier this month, a survey by the Food and Drink Federation found that three-quarters of members have reported the cost of ingredients increasing, as well as falling profit margins.

Uncertainty following the Brexit vote has been blamed for the tough trading conditions. 

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Published at Thu, 13 Oct 2016 00:23:22 +0000

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