Why Unilever is Uniquely Positioned to Demand Price Increases
Tesco is in a dispute with Unilever after resisting to increase prices for a number of its iconic household brands ranging from Marmite to Dove. Unilever, arguing price increases are inevitable in the wake of a weaker pound, is in fact uniquely positioned to push through higher prices for its brands. The move, then, could be more detrimental to Tesco than Unilever, which owns a number of power brands that are either leading or at best ranking second place in their respective categories. According to Euromonitor’s latest data, the company has 37% share in ice cream, 31% share in laundry detergents and owns the single largest yeast based brand –Marmite- with an impressive 85% share of the market. By delisting Unilever’s brands, Tesco runs the risk of shoppers migrating to other stores, which will further erode Tesco’s already declining share in the UK grocery scene. In the long run, Tesco (and other retailers if they follow suit) is likely to negotiate a deal with Unilever which might entail price rises for certain brands but not all.