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Unilever: Supply situation with Tesco in the UK and Ireland resolved

Published 13/10/2016

Unilever: We have been working together closely to reach this resolution
Unilever: We have been working together closely to reach this resolution
Umami is the chemical glutamate, a protein found in meat and other savoury foods such as Marmite, which gives food its tastiness

Unilever has said the supply situation with Tesco involving the price of Marmite and other products has been successfully resolved.

In a statement the company said the items were once again "fully available".

A spokesman confirmed: "Unilever is pleased to confirm that the supply situation with Tesco in the UK and Ireland has now been successfully resolved.

"We have been working together closely to reach this resolution and ensure our much-loved brands are once again fully available. For all those that missed us, thanks for all the love."

A Tesco spokesman said: "We always put our customers first and we're pleased this situation has been resolved to our satisfaction."

Earlier, Unilever's finance chief said that the price of Marmite and other products are set to rise as a result of the collapse in sterling, with experts warning that consumers could have to stomach more pain in the new year.

Speaking alongside the group's third quarter results, chief financial officer Graeme Pitkethly said: "In the UK, which accounts for 5% of turnover, prices should start to increase to cover the cost of imported goods due to weaker sterling."

The group, which is also behind brands such as Flora and Persil, is believed to have demanded a 10% price rise due to the falling value of sterling, halting deliveries to Tesco when it refused.

Since the EU referendum on June 23, the pound has lost around 18% of its value against the dollar, resulting in higher costs for retailers.

The stand-off had left the supermarket facing a shortage of brands such as Surf washing powder, Comfort fabric conditioner, Hellmann's mayonnaise, Pot Noodle and Ben & Jerry's Ice Cream.

Steven Dresser, retail analyst at Grocery Insight, said there was likely to be a round of price hikes in January as retailers look to pass on higher costs once the festive season is out the way.

"No one wants to put prices up ahead of Christmas. Others may just wait until January."

"It's only going to get more painful," he cautioned.

Mr Dresser added that the Tesco row over prices with Unilever was a "pre-cursor" to other moves by suppliers to put up the costs of their products.

The price hikes helped Unilever report a rise in sales in the third quarter, with the firm saying underlying sales rose 3.2% in the period, with total sales coming in at 13.4 billion euro. However, Unilever added that it took a hit from currency movements.

Earlier this year, the firm posted profits of around £2 billion for the first half of 2016.

Chief executive Paul Polman warned in June that a vote to leave the EU's single market would increase prices for consumers.

But MPs condemned Unilever, saying the company was using Brexit as an excuse to exploit consumers, and warned it may be damaging its brand.

Shares in both companies took a hit as a result of the spat. Tesco shares were down 2.73% and Unilever was down 4.26% in afternoon trading.

It is understood Unilever is also in active discussions over price rises with the other major supermarket chains, but Tesco's fellow Big Four grocers declined to comment.

The Co-Operative also said it does not "talk openly around discussions with any supplier".

Discounter Lidl added: "Whilst we do not discuss buying prices, we can always assure our customers that we will offer them the best quality products at the lowest retail prices."

Downing Street also refused to get drawn into the row.

Prime Minister Theresa May's official spokeswoman said: "It's a decision for companies how they market and sell their products."

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