Marmite, PG Tips, Hellmanns, Flora and Persil, are among the Unilever brands no longer in stock on Tesco's website
Marmite, PG Tips, Hellmanns, Flora and Persil, are among the Unilever brands no longer in stock on Tesco's website

Tesco and Unilever resolve price row

Tesco and Unilever have resolved a dispute that saw some of the UK’s best known brands pulled from the retailer's website.

Tesco has refused to comment on the latest development but Unilever has put out a statement confirming the row has been resolved.

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

Marmite, PG Tips, Hellmans, Flora and Persil were among the products that stopped being available on Tesco's website after Unilever stopped making deliveries.

The row is believed to have centred on Tesco's refusal to accept a 10% price hike from Unilever.

Unilever, which is number one in Gartner's supply chain top 25, is understood to have raised prices because of increased production costs caused by the weaker pound.

Tesco said previously: “We are currently experiencing availability issues on a number of Unilever products. We always work to ensure customers get the best possible prices and we hope to have this issue resolved soon.”

The dispute is a sign of things to come, said David Read, CEO of hospitality and food services firm Prestige Purchasing. “This is the leading edge of negotiations that everyone selling food to consumers will be forced to have in the months ahead,” he said. 

Buyers need to understand the geographical sources of products they are buying, Read advised, and familiarise themselves with their supplier’s hedging strategies.

Retailers were feeling “pressure to drive the burden back up the chain” in the face of tight margins and consumers accustomed to falling food prices, he added.

Suppliers, too, were feeling the pinch, said Roy Williams, managing director of procurement firm Vendigital.

“Anyone that thinks Unilever is just trying it on, are wrong… Deep falls in the value of the pound since the EU referendum are cutting deeply,” he said.

During the dispute Williams said Unilever was on the back foot and would have to work hard to re-open negotiations with Tesco. “Pursuing across-the-board price increases from [retailers] is a blunt attempt to offset rising costs and this kind of approach would not stand up to detailed cost analysis by Tesco,” he said.

He said retailers facing their own cost pressures would be reluctant to pay suppliers more without understanding how exchange rates have impacted the cost of specific goods.

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