Tuesday 28 January 2020

Q&A: Should we be stockpiling supplies of Pot Noodles and Lyons Tea?

Marmite was in short supply on Britain’s supermarket shelves. Photo: Yui Mok/PA Wire
Marmite was in short supply on Britain’s supermarket shelves. Photo: Yui Mok/PA Wire

Colm Kelpie

Q: Why is Supervalu warning that it may not be able to stock certain popular products?

A: Because it's embroiled in a pricing row with one of its suppliers, Unilever. It's one of the world's biggest consumer goods companies.

Q: What items will be affected?

A: A considerable number. Unilever supplies a whopping 800 products to Supervalu. Unilever's brands include Knorr sauces, Lyons Tea, Colmans mustard, Hellmann's Mayonnaise, Flora, Stork Margarine, Ben & Jerry's ice cream, HB, Dove, Pot Noodle and Persil.

Q: What's the row all about?

A: Supervalu said Unilever has sought an "unjustified price increase" of up to 19pc. It has coincided with a row between Tesco UK and Unilever because the latter wants to up its prices to compensate for the dramatic weakness in sterling. Tesco is fighting back, and has pulled Unilever products from its website. But Supervalu argues that, if anything, it should be getting a price decrease because of the plunging value of the pound.

Q: But we don't use sterling?

A: Precisely. That's why SuperValu is arguing for a price decrease, given the fact that sterling has weakened considerably against the euro. Unilever refused to comment when contacted by the Irish Independent.

In the UK, it said increases to offset rising costs were a normal part of business, claiming it was a "normal devaluation-led cycle".

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.

The UK row is easy to understand, but why Unilever has decided to lump Ireland in with its push for price increases is more difficult to fathom.

Q: Is it just Supervalu, or are other supermarkets in Ireland affected also?

A: It is understood that Centra, which is also owned by Supervalu parent company Musgrave, and Dunnes, are also holding out against Unilever.

Q: Oh dear. I love my pot noodles. Should I be stock piling?

A: Well Supervalu is understood to have between two and four weeks supply of goods left. It's expected to stop importing from the supplier this week.

Q: Has Supervalu said when it will be resolved?

A: The supermarket giant said negotiations between it and Unilever are ongoing and that it is "examining all options open" to it. But it hasn't been able to say when, or if, the dispute will be settled.

Q: Could other big name suppliers now follow Unilever's example?

A: They may think twice given the level of bad publicity that this has brought on Unilever, but I wouldn't rule it out. It has been speculated that food companies such as KitKat maker Nestle may also look to increase prices.

Q: So Brexit is beginning to bite the British consumer?

A: It's certainly the most vivid sign to date of how the decision to leave the EU will hurt shoppers.

It also signals that prices in Britain are on the way up. And that could be bad news, as it will be a squeeze on consumers' wallets.

Economists have pointed out that consumer spending has helped drive the recovery in the UK in 2014 and 2015. Some are expecting that inflation could go beyond the Bank of England's target of 2pc, from around 0.6pc in August.

Irish Independent

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