Unilever owns brands including Marmite
(Picture: PA Archive)Unilever, the consumer goods giant behind everything from Dove soap to Hellmann’s mayonnaise and Ben & Jerry’s ice cream, is raising prices rapidly as its costs soar.
The FTSE 100 giant said today it had increased its prices by 5.4% in Europe over the last three months. Around the world, prices rose by 8.3% in the first quarter, accelerating from 4.9% in the final three months of 2021.
Prices are rising in response to what CFO Graeme Pitkethly called “frankly unprecedented” increases in raw material costs.
Unilever today added €1 billion to its estimate of inflation in costs this year. In early February, the company said rising prices would add roughly €3.5 billion to costs in 2022. Today, it said the figure would be more like €4.8 billion. Pitkethly blamed the war in Ukraine for making existing problems worse.
Analysts at Barclays said the guidance on cost inflation was “a concern.”
More price rises are in the post but Pitkethly said it would “continue to price responsibly” so that it doesn’t tank brands by making them unaffordable.
Laura Hoy at Hargreaves Lansdown said: “Consumers are becoming increasingly comfortable with private label brands, and generic replacements are going to start looking a lot more acceptable as the pressure on household budgets continues to build.
“That’s bad news for companies like Unilever, that rely on familiarity and consumer trust in order to charge a premium for their products.”
Higher prices helped offset falling volumes in the first few months of the year, with Unilever’s sales by quantity down 1% in the first quarter. Turnover was up 11.8% to €13.8 billion thanks to higher prices at the tills.
The consumer goods giant, which also owns Persil detergent, said profit margins for the year were now likely to be at the bottom end of its previously guided 16% to 17% range.
Pitkethly said it had been a “good start to the year” despite “challenging” circumstances.
Shares were unchanged in London.
