Britain should get used to price increases, Unilever boss says
Britain should "get used to" prices increases following the pound's collapse, the boss of consumer good giant Unilever said - just months after the firm was caught up in the Marmite saga.
Chief executive Paul Polman defended the company's decision to raise prices in the UK, and said that the Dove soap and PG Tips firm was well-versed in dealing with currency volatility.
"The decision to increase prices in the UK was definitely the right one," he said in a conference call with journalists on Thursday.
He explained that the firm has already adjusted prices amid "huge currency swings" in countries like Egypt, Argentina, Brazil and Nigeria - and that similar price changes should not come as a surprise to consumers in Britain, following the drop in sterling.
He said: "There's nothing new here, we should get used to that."
His comments come just months after the company was locked in a stand-off with Tesco over a 10% price hike, leaving Britain's largest supermarket grappling with a shortage of store cupboard staples - including Marmite, Pot Noodle and Persil.
Unilever later said the dispute had been resolved, but warned that consumers would still have to stomach more pain in the new year.
Tesco boss David Lewis took a swipe at global suppliers shortly after the spat, saying price increases should be "justified" and not be made in an effort to prop up profits so that they look appealing to investors.
But Mr Polman said competitors, including domestic supermarkets, were also increasing consumer price tags.
He added: "I happen to like French wine, and I noticed that most of the brands that the supermarkets sell themselves have increased and it's not surprising to me because they're paying 20% more for getting this stuff now from France.
"So we shouldn't get too excited about that."
The pound has fallen nearly 16% against the US dollar compared to its pre-referendum peak, and 10% against the euro.
Unilever said adverse currency effects translated to a 1% drop in full-year turnover last year.
Those headwinds - as well as economic challenges in India, Brazil and Europe - forced the company to warn of a "slow start" to 2017.
Unilever shares fell more than 4.5% following the news, making the group the biggest faller on the FTSE 100 Index.
Annual pre-tax profit rose to to 7.47 billion euro (£6.3 billion) from 7.2 billion euro (£6.1 billion) last year, but revenues dropped 1% to 52.7 billion euros (£44.7 billion), while underlying sales rose by a lower-than-expected 3.7%.
The company said it suffered from severe disruptions from the economic crisis in Brazil and India's demonetisation drive, which saw huge banknotes taken out of circulation.
Unilever - whose vast array of brands also includes Flora spread, Magnum ice cream and Lipton tea - said price deflation in Europe also continued to weigh on sales in developed markets, which dropped 0.2% despite growth in North America.
Mr Polman said: "Our priorities for 2017 continue to be volume growth ahead of our markets, a further increase in core operating margin and strong cash flow.
"The tough market conditions which made the end of the year particularly challenging are likely to continue in the first half of 2017.
"Against this background, we expect a slow start with growth improving as the year progresses."