Marmite ‘Price War’: How Investors Can Spot Companies With Pricing Power

The Unilever and Tesco battle shows that ‘pricing power’ will be a key issue for investors in a post-Brexit environment. What key characteristics should stock pickers look for? 

Emma Simon 13 October, 2016 | 1:07PM
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Two of the UK’s largest companies – Tesco (TSCO) and Unilever (ULVR) – are locked in a bitter dispute over the pricing of premium brands, such as Marmite, Hellmann’s Mayonnaise and Ben & Jerry’s ice-cream.

Unilever wants to push through a 10% price increase in these items, following the collapse of sterling after the Brexit vote. Tesco is refusing to pay the higher price, and has pulled some brands from its online store. Products remain on shelves in stores for now, but the supermarket said supplies are running low of certain items.

This so-called “Marmite Spat” is unlikely to be an isolated incident. Kathleen Brooks, research director at City Index said: “This battle is just the latest fallout from Brexit. With the pound dipping again [against both the dollar and euro] price wars are likely to heat up.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Apple Inc156.81 USD0.00Rating
Burberry Group PLC1,782.50 GBP0.00Rating
Compagnie Financiere Richemont SA133.45 CHF0.00Rating
Halma PLC2,972.00 GBP0.00Rating
LVMH Moet Hennessy Louis Vuitton SE692.00 EUR0.00Rating
Samsung Electronics Co Ltd GDR1,494.50 USD0.00Rating
Tesco PLC279.15 GBP0.00Rating
Unilever PLC3,951.50 GBP0.00Rating

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk