Tesco and Unilever price dispute

Recently Tesco and Unilever had a disagreement over the latter’s demand for a 10 per cent increase in the wholesale prices of its entire product range. Unilever had wanted to raise its prices to compensate for the steep drop in the value of the pound.

Tesco had halted online sales of top-selling goods produced by Unilever such as Persil washing powder, Ben & Jerry’s ice cream and Marmite.

Unilever released a statement soon after resolving the issue,

“Unilever is pleased to confirm that the supply situation with Tesco in the UK and Ireland has now been successfully resolved,” Unilever said.

“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.”

Sterling has dropped by about 16% against the euro and 19% against the dollar since the UK’s vote in June to leave the EU. The sharp drop has left suppliers and retailers dealing with the effects of higher bills for imported goods.

Bruno Monteyne, retail analyst at investment manager Alliance-Bernstein, said that the price row would not be a one-off incident: “This is not just about Tesco and Unilever. It is about all UK retailers and suppliers.”

Monteyne predicts that food prices will rise by about 3% over time as the impact of the falling value of the pound is reflected on supermarket shelves.

Despite the swift resolution, UK consumers have been told to brace themselves for price rises. Other negotiations may be less public, but it’s understood that a number of suppliers have approached supermarkets asking for cost increases to be covered.