Reading the press today, it is dominated by the disagreement between Tesco and Unilever over Marmite. Now, we have long referred to Marmite as “Love it or hate it” but will this latest development have an impact on the brand or play into Unilever’s hands.
In my view, Unilever are absolutely within their rights to put their wholesale prices up, if costs have gone up. No producer can suck up all the increases, but we have seen this over the years with smaller producers, where Tesco and other retailers, have bullied smaller food producers into adsorbing all cost rises. It has to stop somewhere and maybe this is where it happens.
However, there is also a second issue that Unilever will be considering, what is the cost of some of their biggest brands not being available across the country, will consumers switch to alternative brands rather than switch retailer? I suspect they will.
Marmite maybe the exception, Marmite lovers will go to the ends of the earth to buy some and there is no viable alternative, but the same cannot be said for other Unilever products like Ben & Jerry’s ice cream. With these types of products, it is an easy switch purchase and it only takes a customer to try an alternative and like it and Unilever loses the brand loyalty and ultimately sales.
So, when Tesco and Unilever are sitting round the table to negotiate a new deal, neither one is going to want to miss out. Tesco can’t afford to be without some of the largest grocery brands in the world, it would seriously affect their proposition. Unilever can’t afford to be without the shelf space that Tesco provide, it would have a serious dent in their sales. So the question is, who will win? My guess is neither, they will reach a compromise and we will soon see Marmite back on the Tesco shelves.
So why “First World Problems”, well if all we have to worry about is whether or not we can buy Ben & Jerry’s ice cream or Marmite the world must be a great and happy place, but it is not. There are many more important issues that huge numbers of people have to deal with, where to get water, disease, natural disasters like Haiti, not to mention the wars. So why is it then that the media is dominated by such trivial matters, it is simple, we get bored and yesterday’s news is old news.