Marmitegate – it divided the nation. You might even say it spread fear. Either way, Tesco revealed last night that it has resolved its feud with Unilever, producer of everything from Marmite to Ben & Jerry’s ice cream, after the consumer goods giant tried to impose a blanket 10 per cent price hike on its products due to the falling pound.
As patriotic Twitter users (and Nick Ferrari) pointed out, Marmite is made in Britain, using British ingredients – therefore it should not be affected by sterling. Unilever’s move appeared a tad severe, therefore, but should remind us that these kind of strong-arm tactics are common in many industries – especially retail.
Never mind the weaker pound, and never mind Unilever’s cuddly image as an ethical company, this is a typical story of boardroom belligerence. The only difference was the unsightly public performance. As for Tesco, its complaint seemed to be that Unilever was using a combination of falling sterling and its power as one of the world’s largest companies to push up margins to an unreasonable degree.
Lest we forget, Tesco boss Dave Lewis has insider knowledge: he does, after all, hail from Unilever. But the sense of injustice Tesco executives were experiencing will be familiar to many supermarket suppliers, who have complained about that kind of bullying from retailers for years. Speak to them, and they’ll tell stories of late payment, harsh negotiating tactics and enforced multibuy offers.
Indeed, Tesco itself has been repeatedly accused of bullying suppliers – in February 2015 it was accused of “commercial bullying” by the Forum of Private Business, while in June that year it was among three retailers named in a YouGov poll as exhibiting the worst behaviour when it comes to dealing with its suppliers. To be fair to Tesco, it is stuck between a rock and a hard place.
On one hand, the ongoing supermarket price war, sparked by the likes of Aldi, is forcing it to keep prices low. On the other, the falling pound will cause more suppliers to jack up their prices. But it will be hard for suppliers not to derive some sense of revenge from this. After all, if you live by the sword, you can’t complain when someone bigger and stronger decides to use it against you.