Marmite, Ben and Jerry’s ice cream and Hellmann’s mayonnaise maker Unilever has implemented its biggest quarterly price rise in history as the consumer goods manufacturer fought to keep up with soaring food and materials inflation.
The Blackfriars-based business, which also sells Dove bodywash and Lynx deodorant, said it had put prices up by an average of 12.5% in the three months to September and had also reduced the pack sizes of some products to prevent further price rises.
Unilever CFO Graeme Pitkethly said: “We’re still not recovering all the inflation we see [and] we expect our margins to be down 240 basis points.”
“Pack size is only one lever in managing pricing and affordability…very often there’s a good reason for that because hitting a particular price point is important to consumers.”
Unilever posted sales of 15.8 billion Euros (£13.8 billion) in the three months to September, up 10.6% on the previous year, led by strong growth in its ice cream and home care divisions.
Emerging markets sales were up 13.3%, more than double the sales growth in Europe, in part thanks to the 15% average product price rises in those regions.
However, the firm said sales volumes had fallen 3.2% in Europe 1.6% globally over the period, and it warned it expected an even greater decline in the next quarter, amid continued consumer sentiment lows, an expected fall in demand for non-essential items and a drop-off in sales of seasonal products like ice cream over the winter.
Matt Britzman, Equity Analyst at Hargreaves Lansdown, said: “Raising prices and keeping volumes ticking higher is beginning to become a mammoth challenge, especially at the scale Unilever’s pushing through the price tags.
“The group did warn volume declines are likely to accelerate up to the full year mark. That’s in line with what we’re seeing across the market, with cost pressures starting to have a bigger effect on consumer spending habits as pent-up demand and savings start to fade away.”
Unilever shares stayed flat, hovering around its previous close of 3,869p.
