‘Marmite-Gate’ Shows Problems Ahead for Retailers and Suppliers

THE WEEK: Unilever and Tesco have settled their differences, but Morningstar columnist Rodney Hobson says this suppliers remains vulnerable in current market conditions

Rodney Hobson 14 October, 2016 | 10:33AM

Who would have thought that the first casualties of the Brexit vote would be PG Tips and Marmite? Yet this week we had a 24-hour stand-off between Tesco (TSCO) and Unilever (ULVR) that will have serious implications for supermarkets and their suppliers.

Supermarkets have a history of squeezing their suppliers – sometimes into the ground - especially when, as now, there is a price war in full swing. Few suppliers are big enough to stand their ground and risk losing their biggest customers. Unilever is an exception.

Details have not been disclosed but the Anglo-Dutch household goods manufacturer apparently demanded a 10% price increase.  Supermarkets do not like that. They like to dictate terms.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Premier Foods PLC85.90 GBX2.02
Tesco PLC225.90 GBX0.18
Unilever PLC4,735.00 GBX1.61
WH Smith PLC994.50 GBX-2.21

About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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