THE GREAT MARMITE SCAM
Food giant is forced into U-turn over Brexit ruse
MARMITE, PG Tips, Hellmann’s and other family favourites will go on sale again at Tesco after manufacturer Unilever axed blanket price rises following threats of a shopper boycott.
Unilever retreated amid widespread outrage after it blamed Brexit for a 10 per cent price rises on dozens of brands.
It is a humiliating U-turn for the firm, whose share price lost £3billion during the furore.
The company was accused by supermarket insiders of using Brexit as a smokescreen to justify the price rises after it claimed a fall in the value of the pound had put up the cost of imported products and ingredients.
But an insider at another supermarket told the Mail that Unilever’s claims were a red herring, pointing out that many Unilever products, such as Marmite, are made in Britain and are therefore largely immune to currency fluctuations.
He added: ‘The aggressive manner in which they attempted to impose blanket price rises was very different from other manufacturers.’
Asked whether it was blackmail, he said: ‘They were certainly using their very heavy bargaining power. Some people might describe it as anti-competitive.
‘The catch-all claim that these rises had been driven by Brexit and the fall in the value of the pound did not stand up to scrutiny. This was a smokescreen to cover much wider increases than were justified.’
The pound has fallen by about 14 per cent against the euro and 17 per cent against the dollar. But Unilever’s profit on sales is 15 per cent, putting it in a stronger position to absorb higher costs than Tesco, whose margin is 1.7 per cent.
When Tesco challenged Unilver’s across-the-board price rise, it was told to ‘lump it’. But the supermarket called the manufacturing giant’s bluff and refused the ultimatum.
Unilever, which made profits of £2billion during the first half of 2016, stopped supplies of 200 products including Dove, Flora, Pot Noodle, Ben & Jerrys, Knorr and Bertolli, leaving shortages on shelves.
However, its heavy- handed approach prompted a campaign for people to stop buying its products, promoted on Twitter with the hashtag #BoycottUnilever.
In the face of consumer fury and a growing PR disaster, the Anglo-Dutch company, which is worth more than £100billion, backtracked last night and announced a new supply deal with Britain’s biggest supermarket.
It said: ‘Unilever is pleased to confirm the supply situation with Tesco has been resolved. We have been working together closely to reach this resolution and ensure our muchloved brands are once again fully available. For all those that missed us, thanks for all the love.’
The details of the deal are secret. But it seems likely that a more limited range of price increases will be applied over the coming months.
Tesco said: ‘We always put customers first and we are pleased this has been resolved to our satisfaction.’ The news appears to be a victory for Tesco boss Dave Lewis, who spent more than 20 years at Unilever before joining the supermarket.
The row was seized upon by some Labour MPs who campaigned for Britain to remain in the EU.
Stephen Kinnock, of the Open Britain campaign, said: ‘When the plunging pound stops you from getting PG Tips and Marmite in the supermarket, you’re truly starting to feel the first tremors of Brexit.’
But Sainsbury’s boss Mike Coupe said the fall in the pound did not have to push grocery prices up because it could be offset by lower commodity prices.
The British Retail Consortium said supermarkets could not absorb big price rises. Chief executive Helen Dickinson said: ‘Retailers are firmly on the side of consumers.’
Shoppers welcomed Unilever’s Uturn. Speaking at a Tesco in Cambridge, Emma Wood, 58, said: ‘I was shocked to learn that this company wanted to take advantage of Brexit. These companies will try to find any excuse. It is a relief that they haven’t succeeded. Other businesses should do the same and not give in.’
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