The owner of Marmite, Hellmann’s, Magnum and Ben & Jerry’s ice-cream has warned of further price rises after commodity, labour and energy costs resulted in the biggest quarterly increases in its history.
Unilever said sales revenue rose 10.6% in the three months to September, driven by a 12.5% jump in prices, while the volume of goods sold decreased by 1.6%.
Alan Jope, the group’s chief executive, said he expected high inflation to continue into the first half of 2023 because of higher commodity prices, the weakness of the pound and other currencies against the dollar, and greater processing costs being passed on to Unilever by suppliers.
He added that Unilever also had fixed-price deals in place with certain suppliers that were due to expire by next year.
The company said it expected inflation to add €4.5bn (£3.9bn) to its costs for the full year and about €2bn to its costs in the first half of next year.
Despite the price rises, Jope said there had been little sign that consumers were trading down to cheaper brands on value or health and beauty.
“We do see that the consumer is going to be under more pressure,” he said, but added that was offset by “high levels of employment”. “Things have to be pretty bad in homes before they start compromising on quality of the types of brands we sell,” said Jope.
In a potential sign consumers are giving themselves small treats while reining in spending on big items such as furniture, Jope said that sales of higher priced premium goods were increasing sales at the same pace as cut-price items.
Ice-cream and deodorant were among the strongest-selling items. It was a hot summer for much of Europe, during which takeaway ice-creams sold particularly well.
Jope said deodorant and shampoos were selling well because of the return to socialising. However, he said scratch-cooking ingredients such as bouillon cubes, which proved popular when restaurants were closed to diners during Covid lockdowns, were continuing to sell well as dining at home was now an “economic choice”.
Jope said Unilever brands such as Magnum were still on sale in Russia but added that the company was not putting any new investment into the country or taking any dividends or other profits out.
He said the goods on sale were being made in Russia for Russians and were linked to 3,000 jobs in the country. He said the company had no plans to change that position but would “keep it under close review”.
