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Business

Unilever's 'Marmitegate' shows strain on consumer industry

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Business

Unilever's 'Marmitegate' shows strain on consumer industry

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COMING UP:Unilever's 'Marmitegate' shows strain on consumer industry

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Transcript

00:00:00
>> Post Marmite-gate, Unilever's push to raise prices shows the vulnerabilities of the company and an industry that is having difficulty selling more goods. This is Martinne Geller, Reuters' Consumer Goods Specialist Correspondent, reporting from London where there's a collective sigh of relief that Marmite is back on store shelves.
00:00:19
Since Britons voted in June to leave the European Union, the sterling has fallen about 19%, raising costs for imported goods or goods that are priced in US dollars. So companies like Unilever and its rivals, their costs have just gone up by about 18%. The wider industry is already suffering globally from a slowdown in sales.
00:00:44
And overall there's been deflation in Europe because of intense price competition. So Unilever tried to raise prices to all the big four retailers. Sources say it was about 10%, and Tesco said no, and temporarily removed some of Unilever's products from its shelves. The two companies very quickly resolved the situation and Marmite is back on shelves.
00:01:08
This problem is definitely not gonna go away. This is only the beginning. All UK prices are expected to go up. Experts say that they should start going up in November, December time. Things are probably not gonna get impossible for the consumer. Companies are trying everything they can to mitigate price increases.
00:01:25
And that could even be things like making packages smaller or putting things on buy one, get one free. So it doesn't necessarily mean straight up price rises, there are ways around it. We spoke to a few other consumer goods companies and they basically all said they're all facing the same problems that Unilever is facing, but not yet ready to raise prices.
00:01:48
Somebody always has to go first. It's usually the biggest, so now that Unilever has gone forward we can expect other smaller companies to follow suit.