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The need for food companies to be completely transparent about their pricing – particularly if they attempt to increase the cost of their products – will continue to be tested in the run-up to the UK’s departure from the European Union (EU).
Like-for-like sales of Marmite have risen by more than 60% in the week following the brand’s public dispute with Unilever, according to data from IRI. The brand added £335,000 in value sales – an increase of 61% over the same week last year – which equates to 129,000 more jars sold.
Unilever had previously settled its price dispute with Tesco within 48 hours, after calling for an increase of 10% to its wholesale prices. The company had blamed the decision on price pressures caused by the weakening of the pound; indeed, at its lowest this month, the pound had fallen against the dollar by more than 18% compared to pre-Brexit levels – from $1.49 to $1.21.
But Tesco feared a backlash from consumers and rejected the changes – even to the expense of removing a host of household names from its website.
Many consumers and analysts backed the retailer, with some questioning why Unilever had not felt it necessary to lower the price of Marmite when the pound had been stronger. The pound had peaked at $1.61 in the last two years, increasing to $1.72 as recently as July 2014, but the price of Marmite remained unchanged. Against the euro it has been a similar story.
Of course, Unilever shouldn’t need to change the price of its products in line with the strength of the currency – and, indeed, this probably isn’t what consumers want. But the FMCG giant – and others like it – will need to learn the lessons of the past two weeks when it comes to how transparent they are with consumers about the price of their products.
Martin Wood, head of strategic insight – retail for IRI, said: “Such huge sales increases are unusual. It’s higher than we’d usually see after major TV advertising campaigns but less than we’d expect if people are panic buying. The publicity clearly made Marmite top of mind for regular buyers.”
There’s no doubt that the brand wields huge consumer power. These latest figures from IRI have proven that there are better ways for Unilever to leverage this brand loyalty than trying to force retailers into arbitrary price rises, as was the case two weeks ago.
We contacted Unilever for comment, but they have so far declined to respond.
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