Unilever has increased prices for products including Marmite, Pot Noodle, Magnum and Dove soap by up to 11% as it battles with rising costs throughout the supply chain.
The FMCG giant revealed that the price of what it buys will rise by billions of pounds this year, but it is solving this pressure by putting up prices.
As a result, the company warned that the outlook for how much costs might increase by is “uncertain and volatile”.
Despite the price rises, Unilever said that turnover reached €29.6 billion (£25.1 billion) in the first half of the year, a rise of 14.9%. and has increased its sales guidance accordingly.
READ MORE: Magnum multipack suffers ‘shrinkflation’ as Unilever looks to reduce cut costs
In the first half of the year, the company reported an 8.1% increase in underlying sales, with turnover increasing by 14.9% compared to the same period last year.
The company is also expecting a £3.9 billion hit from inflation this year.
However, this comes as volumes across the company – which measures the number of products that the company sells rather than the amount it sells them for – dropped by 1.6%.
“Unilever has delivered a first half performance which builds on our momentum of 2021, despite the challenges of high inflation and slower global growth,” Unilever CEO Alan Jope said.
Matt Britzman, equity analyst at Hargreaves Lansdown said that it is “no surprise to see inflation and global uncertainty called out as headwinds, but importantly for Unilever work done raising prices is keeping sales and profits moving in the right direction.”
He added that the operation’s becoming “less efficient as inflation pushes a host of costs higher,” and that comes through in the lower margins, but crucially they’re staying in line with guidance.
“Having a host of strong brands is essential if any business wants to pass on rising costs, and Unilever has those up its sleeve – the ability to raise prices just shy of 10% and only have a 1.6% drop in volumes is a good place to be,” he said.
“There’s a limit to how much someone will pay for a Magnum though, and we’ve heard from supermarkets that shoppers are now starting to slide down the value chain in an attempt to keep shopping lists intact.
“Juggling higher prices and weaker consumers is a tough act to nail, so far Unilever looks to be doing a decent job and if restructuring savings of around €600 million can materialise, that’ll take some pressure off.”
Click here to sign up to Grocery Gazette’s free daily email newsletter
1 Comment. Leave new
T E Stockwell Yeast Extract is cheaper from Tesco. Is cheaper and tastes the same as Marmite to me.