Marmite: you either love it or hate it. Or so the advert goes.Well, those that love it, really love it.Following Unilever’s recent row with Tesco, dubbed ‘Marmitegate’, consumers flocked to Twitter, signed petitions and complained loudly to news channels.Threatened with a 10% price hike for many of their best-selling brands, the retailer withdrew a significant number of Unilever lines from their shelves. Brits from Dover to Dundee were incensed; the press waxed lyrical about the episode as a post-Brexit portent of doom, and £3 billion was wiped off Unilever’s share price.
Today, we can rest easy: Marmite (and Ben & Jerry’s, and PG Tips) are back on Tesco’s shelves. But their prices have risen – despite the supermarket’s claim that the stand-off
had been resolved ‘successfully’
The episode raises uncomfortable questions about market behaviour following the Brexit vote. More positively, however, the row demonstrates the important role brands can play in influencing distribution strategies – something all business owners should take note of for 2017.
Put simply, Unilever was able to back Tesco into a corner thanks to the star power of their brands, actively and carefully nurtured over years. Unwilling to risk losing their customers, who Tesco believed would shop for their favourite brands elsewhere, the supermarket shrewdly came out fighting, positioning themselves as ‘champions of the people’ (or at least the High Street).
In the short-term, Tesco dealt a decisive PR blow to their supplier. But the real winner was Unilever, who was able to make the retailer – and consumers – absorb their increased costs following the fall in value for the pound.
The Brexit effect
The Tesco-Unilever price row should act as a valuable – if extreme – example of the market shifts to expect following the Referendum. The falling price of the pound means UK importers will increasingly be able to squeeze their British suppliers, as Unilever have done.