Tesco has delisted Unilever's Knorr Ragu range while other retailers are understood to be sourcing it from the grey market after the supplier asked for a 21.4% price increase.

Tesco said the brand was removed following a range review in June. Talks were now taking place between the two parties regarding Ragu's future, it added.

Another retail source said supermarkets had been angered by Unilever's price rise demands. "On Ragu it has been trying to put through cost of goods increases of 21.4% where on our own-label cooking sauces we have seen costs decrease," she said. "It's not that it's justified by commodity rises or increases in cost of production."

Unilever recently demanded double-digit price hikes on its 100 top brands, with the largest on Ragu.

A Unilever spokesman declined to comment on why Tesco had ditched the brand.

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