October 28, 2016 / 4:59 PM / 3 years ago

Morrison raises Marmite price by 12 percent after 'Marmitegate'

LONDON (Reuters) - British supermarket chain Morrison (MRW.L) has raised the price of Marmite yeast spread by 12 percent, passing on to consumers an increase sought by its maker Unilever (ULVR.L) that led to a row with retailer Tesco (TSCO.L) this month dubbed “Marmitegate”.

Toast with Marmite, a Unilever brand, sits on a kitchen counter in Manchester, Britain October 13, 2016. REUTERS/Phil Noble

“Sometimes we have to increase prices as a result of costs rising although we do our best to avoid this,” a Morrison spokeswoman said in an emailed statement.

“More often than not we have been reducing prices and more than 3,000 products are currently cheaper in our supermarkets than they were last year.”

Morrison is now charging 2.64 pounds for a 250 gram jar of the brown spread, which famously pleases or repels the tastebuds of consumers, up from 2.35 pounds.

A Unilever spokesman had no comment.

Earlier this month Tesco temporarily delisted several Unilever products from its website, including Marmite, in a disagreement over price hikes sought by the consumer goods maker.

Unilever wanted to push through the increases as a result of rising import costs, due in part to the pound’s weakness following Britain’s Brexit vote to leave the European Union.

Neither side of that dispute has said what if any price increases were agreed and what their impact would be on prices on the shelves of Tesco stores.

As of Friday afternoon, market leader Tesco was still charging 2.35 pounds for the 250g jar of Marmite, while Wal-Mart’s (WMT.N) Asda was offering a discounted price of 2 pounds. Sainsbury (SBRY.L) was charging 2.50.

Retailers set their own prices based on individual and private negotiations with suppliers. But sources familiar with the situation told Reuters Unilever had been trying to raise prices across a wide range of goods by about 10 percent.

Tesco scored a public relations and share price boost after it stood up to Unilever in a battle that analysts said cast it as a champion for the consumer. Its shares rose about 5 percent the following day and as of Friday were up more than 10 percent in the two weeks since.

Yet Unilever benefited from the publicity as well, with retailers selling 129,000 more jars of the breakfast treat in the week following the incident than they did in the year-ago period, according to market researcher IRIS.

That increase, of 60 percent, generated a 335,000 pound sales boost, IRI said.

Unilever, whose brands also include PG Tips tea, Dove soap and Ben & Jerry’s ice cream, manufactures in Britain the majority of the goods it sells here. Yet the bulk of its costs are for commodities and raw materials priced in euros or dollars, which have therefore become more expensive in sterling terms.

Editing by David Holmes

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