FMCG giant Unilever has revealed its prices have Have increased by 12.5% to an all-time high in its third quarter, compared to its rivals Procter & Gamble (P&G) and Nestlé.
In a replay of its strategy during the 2007-09 financial crisis, the parent company of Marmite and Hellmann’s said prices do vary by category and market, revealing not all customers are experiencing the price rises.
However, compared to its rivals, Nestlé and P&G have both raised prices by less than 9.5% in the same period, having matching price increases since mid-2021.
According to analysts, as cost and margin pressures have been most intense explains Unilever’s decision to increase prices by an overall 12.5%.
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However, hiking up prices, risks damaging relationships with retailers, which are also trying to protect their margins, compared to the height of the global financial crisis in 2008, prices rose about 9% for Unilever, compared to P&G’s 4%.
This comes as the consumer foods industry continues to juggle offset rising energy and labour costs, without losing customers, despite many already switching to supermarket own-brands.
A Unilever spokesperson said.”There are several levers we can pull before increasing prices on shelf, which is a last resort and carefully considered, including reducing promotional activity and offering a selection of products that have higher margins.”
According to Barclays analyst Warren Ackerman Unilever’s cost inflation is running at more than 20% this year, compared to 14%-15% at Nestle.
However, he believes its rivals may not yet have hit the peak of their price rises. He said: “It’s related to how much inflation they are dealing with and exposure to commodities”
This comes as Nestlé acknowledged that cost pressures are intensifying.
“We are still absorbing significant cost, which has led to a notable decline in our gross profit margin,” a Nestle spokesperson said.
Meanwhile, P&G is developing ranges it can sell at different price points, a spokesperson for the company said.