The plot, like one of Unilever’s Knorr stock pots, thickens. And as much as Tesco has “played a PR blinder” (to quote The Guardian) in its handling of the Marmitegate trade dispute, Unilever isn’t coming off too badly either.
The incredible PR Unilever’s brands received – and the love Unilever felt from those who were missing its products when it stopped supply to Tesco – was a real testament to the power of its brands. None more so than Marmite, of course – a brand for whom the complete absence of promos and price adjustments at the major mults over the course of the last year speaks volumes about its unique (if polarising) properties. Not surprisingly, as we reported earlier this week, sales of the yeast extract have increased.
Now The Grocer can reveal that Morrisons has become the first supermarket to increase the price of Marmite and by an eyewatering 12.5%. What will Marmite lovers (and calculator-wielding Brexiteers) have to say?
Marmite has become a lightning rod for post-Brexit trade negotiations. So our story is bound to attract tons more publicity. But Marmite is not the only product going up in price at Morrisons. It’s a highly nuanced picture, with 175 prices up in price and 112 down. Some of that to and fro will also relate to products coming on and going off promotion, but there are plenty that are straight price increases too, involving everything from Colman’s mustard to Wall’s Cornetto and the skew towards price increases on the food side versus price decreases on the non-food side is uncanny: 92 Unilever food SKUs at Morrisons are up in price in the last two weeks, whereas only 19 have fallen. That equates to a 5.4% increase. On the non-food side, however, the cuts and hikes have been meted out more evenly, and the average non-food price is down by 7.1%. That cannot be a coincidence.
Morrisons insists negotiations have involved lots of give and take. It’s also in dialogue with other suppliers who see Unilever’s aggressive tactics as an opportunity – and are willing to soak up forex and commodity costs in the hope they can win the volume game. But that’s risky. And Unilever’s decisiveness, from its bold opening play, to the speed with which it wrapped up negotiations (weeks rather than the three months or so that has become the norm), has put it on the front foot.
And don’t think this is just Morrisons where Unilever products will be going up in price. Yes, it looks like they’ve blinked first. And Tesco can rightly point out that in its case, all price rises relate to items that have come off promotion. But the thing to watch is whether we will see fewer or less generous promos on Unilever lines in the coming months. That way Tesco could indeed claim no price hikes, if they reference only base price, but year-on-year prices consumers actually pay will, of course, be higher.