Brexit hits Marmite lovers around the UK

Tesco stops selling Unilever brands after fall in pound leads to dispute over pricing

(Image credit: Ben Stansall/AFP/Getty Images)

Brexit has hit some of the UK's most loved brands, including Marmite, PG Tips and Pot Noodles.

Tesco has withdrawn these products and more from its online site following a row over pricing with Anglo-Dutch consumer goods company Unilever.

The supplier is "the UK's biggest food and grocery manufacturer with many famous brand names", says the BBC.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.


Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

It's all the result of the UK's decision to leave the EU, which has sent the pound tumbling by more than 18 per cent against the dollar and 16 per cent against the euro.

Unilever says this has pushed up the cost of imported goods it uses and wants to increase wholesale prices as a result.

However, the UK's supermarkets are locked in a bitter price war that has prompted two years of consistent deflation. Tesco is already operating at low margins and fears a hit to its competitiveness if it passes on the increases to customers.

As a result, it has stopped selling Unilever's products to its online shoppers. The brands are still available at its supermarkets, said the grocer, but it is not restocking and "shelves were running short ".

"Negotiations over price between retailers and their suppliers are a constant feature of the industry, but those discussions rarely lead to a public argument and product de-listing," says the BBC.

Bruno Monteyne, an analyst at Bernstein, says: "Clearly the scale of the negotiation is much bigger than usual, but so is the event. Brexit-sized events are rare."

A source told The Guardian: "Unilever is using Brexit as an excuse to raise prices, even on products that are made in the UK."

Unilever rejects the charge, saying it has to import some of the elements, such as bottles and jars, for products made in the UK.

Finance director Graeme Pitkethly said the changes were part of a normal "devaluation-led cycle". The company also said price rises had "landed" with other retailers, meaning some of Tesco's key rivals may have accepted the increases.

The Bank of England previously warned shoppers increasing import costs and a desire by supermarkets not to raise prices could lead to a reduction in content size and quality, leaving consumers paying the same for less.

Continue reading for free

We hope you're enjoying The Week's refreshingly open-minded journalism.

Subscribed to The Week? Register your account with the same email as your subscription.