UK retailer Tesco has reportedly dropped Marmite, Pot Noodles, PG Tips and a range of other Unilever brands from its online shelves, over a pricing row with the FMCG giant.
Unilever noted on Wednesday that it was increasing the prices of some of its products in the UK, following the impact of Brexit on the financial markets, which is believed to have spurred the move.
Commenting on the move, Pinar Hosafci, Senior Packaged Food Analyst, Euromonitor International, said, “This is not the first time Tesco is pressuring suppliers to drop prices. However, this time around the move has been initiated by Unilever and across its entire portfolio of its products. Brexit has been a trigger that started this and it is likely that other companies, which are reporting in Euros including the likes of Nestle and Ferrero will follow suit."
Pinar added that the move "could be more detrimental to Tesco than Unilever, which owns a number of power brand that are either leading or at best ranking in the second place in their respective categories. According to Eurominitor’s latest data, the company has 37% share in ice cream, 21% share in table sauces and owns the single largest yeast based brand –Marmite- with an impressive 85%. It is a company that Tesco cannot afford to ignore."
Bruno Monteyne at Bernstein added, "Clearly the scale of the negotiation is much bigger than usual, but so is the event. Brexit-sized events are rare. This is such a large event that it may simply be that the 2 gorillas on both sides have decided to go through the motions of the negotiation on behalf of the industry. This isn't about Tesco or Unilever but about all UK retailers and suppliers."
The issue is likely to be resolved soon, according to sources familiar with the matter.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.
