THE BREXIT OF SANDWICH SPREADS
Ok. We’re finally able to breathe a sigh of relief after running around like headless chickens frantically lining our shelves with semi-liquid gold (no? just us?). Whatever your views on Marmite – what has cleverly been coined ‘the Brexit of sandwich spreads’ – you can’t deny that it dominated the news on reports that Unilever – its producer – was going to stop supplying it to Tesco. So now we’re finally over the initial shock, we thought we’d take a look back at the ‘scandal’ and assess exactly what happened.
Announcing that it was to raise its prices in the UK by 10% to compensate for the sharp drop in the pound, Unilever took a bit of a risk, especially as Tesco – the UK’s largest supermarket – firmly resisted the move and removed all of its products from its websites (which, by the way, included PG Tips, Pot Noodles, Hellmann’s mayonnaise and Ben & Jerry’s). This was despite Unilever’s finance chief claiming such price increases were a “normal” reaction to shifts in currency values. The UK’s largest food and grocery manufacturer coming head to head with the UK’s largest supermarket – not a pretty sight. And whilst such negotiations between retailers and suppliers are commonplace in the industry, it is thanks to Brexit that this one led to such a public argument and removal of products.
The question of who should take the hit in circumstances such as these – where the British pound has dropped 16% against the euro since the Brexit vote - is certainly a murky one, but according to one grocery insider, Unilever used the weak currency as a smokescreen because some of the products were made in the UK – despite chief executive Paul Polman warning in June that this would happen. Regardless of this, leading retail analyst, Richard Hyman, told the BBC that “retailers can’t just put up their prices and get away with it.”
Somewhat chillingly, many of the large supermarkets – including Tesco, Sainsbury’s, Asda, Morrisons and Marks & Spencer – all warned that this could happen ahead of the EU referendum. And it seems their predictions have come to fruition even faster than anyone expected.
The story has a happy ending, what with Unilever backing down quickly. But the wider implications are serious; will other companies now look at the books and blame Brexit for any less-than-favourable finances?
Luckily with Marmite, you can passionately hate the stuff without it actually affecting you. Unfortunately, the same luxury is not to be had with Brexit.