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Saturday 22 October 2016

Now Unilever claims strong euro will ease its price hikes

Published 15/10/2016 | 02:30

Products like Pot Noodle may disappear from SuperValu shelves Photo: Nick Potts/PA Wire
Products like Pot Noodle may disappear from SuperValu shelves Photo: Nick Potts/PA Wire

Unilever has broken its silence over its row with SuperValu, claiming that a price increase it has sought in Ireland will be cancelled out by currency movements.

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The spat was ongoing last night between Unilever and SuperValu parent Musgrave, which believes the consumer goods giant should be cutting prices.

Popular consumer products like Lyons Tea, Hellmann's mayonnaise and Pot Noodle could run out within weeks unless the row is settled.

Musgrave has been resisting what it has described as an "unjustified price increase" of up to 19pc.

Unilever said that while it has sought a price hike, the stronger euro versus sterling will wipe it out in Ireland.

"There is a currency exchange mechanism in place which has negated the effect of the cost price increase, so there is no real increase in price in Ireland," a spokeswoman said.

Unilever, one of the world's biggest producers of consumer goods, has resolved its bust-up over pricing with Tesco in the UK, but the dispute with Musgrave, which owns SuperValu and Centra, is ongoing.

Musgrave, the Cork-based distributor and franchise operator, demanded Unilever cut its prices instead of raising them.

Unilever supplies about 800 products to SuperValu. Its popular brands include Knorr sauces, Lyons Tea, Colman's mustard, Hellmann's mayonnaise, Flora, Stork margarine, Ben & Jerry's ice cream, HB, Dove, Pot Noodle, Persil, Surf, Domestos and Cif.

Unilever hasn't sought a price increase for all those products, but has halted the supply of them as a result of the dispute.

It follows a similar row in Britain in which Unilever blamed Brexit and said it needed to raise prices to compensate for the sterling slide

The pound has plunged almost a fifth against the dollar in the wake of the EU referendum, sparking a profit fight between suppliers and retailers in Britain squeezed by the currency's dramatic devaluation.

But the Tesco row was resolved late on Thursday evening, sending shares in the supermarket giant surging by 5pc yesterday.

One analyst said Tesco had come across as the "consumer champion" for standing up to Unilever.

Most analysts and economists believe sterling's recent slump will lead to higher prices in the UK, despite fierce competition between supermarkets.

Damien McLoughlin, Professor of Marketing and Associate Dean at UCD Michael Smurfit Graduate Business School, said it was likely that other big-name suppliers would follow Unilever's example. But he doubted Irish consumers would suffer.

"I'd be shocked if there (were) any implications for Irish prices coming in this direction," Prof McLoughlin said. "But the idea that the British consumer can escape cost free from what is almost certainly a permanent devaluation in sterling - I just can't see any way other than their prices going up."

Irish Independent

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