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Big Blue

Marmite storm

As you've probably read Tesco have refused to accept the currency fluctuation Unilever want to impose. This means various products, one of them being Marmite, will start to become unavailable in Tesco stores.  Now I never step foot in Tesco so I'm fine for Marmite but I am interested from a procurement point of view.

Most contracts that rely on imported items have currency fluctuation clauses but often a rate is set annually and the seller hedges for that rate.  The current huge swing means that some financial distress clause may have been implemented or an exceptional circumstances clause. Tesco are refusing to accept any change. Now i have no idea of the contractual arrangement but hilariously Tesco buyers, probably the most brutal in the supermarket sector, have come up against Unilever, a heavyweight of an altogether different breed to farming cooperatives and dairies.  That this is being played out in the media is damaging for both parties but I for one hope Tesco lose out and a village load of SME producers turn up at their head office and just laugh.
Nice Guy Eddie

I see it the other way, If Tesco don't win against Unilever I can only see more misery for the SME suppliers as they try and claw a bit more pound of flesh in savings.

Is it not the case that the new CEO of Tesco is ex Unilever and has a bit of insider knowledge on their costs. What will be interesting is if a cartel is made up of all the UK supermarkets and they tell Unilever to do one or if they take this opportunity to stock more Unilever products at the higher cost to steal more business from Tesco
Michael

From what I've seen I not only don't buy the Unilever brands affected but would go out of my way to avoid them. Marmite is revolting, Pot Noodles shouldn't be marketed as a foodstuff and PG tips is little better then water from a puddle.
Bob Sacamano

I hope it's sorted soon, I'm running low on Pot Noodles and need to do a bulk buy.
TreVoR

Hellmans Mayonnaise!
Big Blue

Nice Guy Eddie wrote:

Is it not the case that the new CEO of Tesco is ex Unilever and has a bit of insider knowledge on their costs.


Yes, but if he behaves like that he's up for being taken to the cleaners by lawyers on a personal basis.
PG

As far as I know, Marmite is still made in the UK. So that's the FX argument fucked then. Perhaps Marmite just a casualty of the wider dispute?
Michael

Profits in Sterling are going to be worth a lot less to them these days.
Big Blue

The bottles and the caps might not be. And the yeast might be imported. And the dark brown ink and the salt.
Frank Bullitt

A good friend of mine is in sales for a company that deals with all the supermarket chains, big and small - his view is that the buyers at Tesco aren't that clever but they are bolshy with their suppliers and he (who works for a small company) finds their inconsistency the biggest issue - for example, you agree a product and the terms then Tesco tell you the terms of return have changed, so you suddenly find that if you have agreed an 'end of isle' deal then suddenly if the product doesn't perform, not only do you take the product back at below cost but you pay a penalty for what they consider they've lost in the product not doing well and taking up prime space.

His view is that the most ruthless people to deal with are B&M - they tell you what they will pay (margins to make you squeal) and that's it, but on the positive you know where you are - deal done with B&M and that it, you deliver and they pay.
Big Blue

Yeah that end of aisle stuff is irritating for supply chain. In our Sainsbury's a lot of Italian products get end of Aisle. Read what you like into that deal.

Back to Unilever: I hope they stop making Ben an Jerrys: filth.
Bob Sacamano

Buy shares in Vegemite quick.
Chris M Wanted a V-10

When I saw the thread title, I thought this might be a new BMW colour option......
PhilD

Chris M Wanted a V-10 wrote:
When I saw the thread title, I thought this might be a new BMW colour option......


It is. Some people love it, some hate it, and Ben chooses it because it's a BMW.
Big Blue

Bob Sacamano wrote:
Buy shares in Vegemite quick.


Don't go on Twitter and say that: several flamings today on the Marmite v Vegemite argument
Bob Sacamano

Big Blue wrote:
Bob Sacamano wrote:
Buy shares in Vegemite quick.


Don't go on Twitter and say that: several flamings today on the Marmite v Vegemite argument


Did they come from a land Down Under?
Big Blue

I don't know but I assume Vegemite is why grown men chunder.
Frank Bullitt

Can you hear the Thunder?
Chris M Wanted a V-10

Frank Bullitt wrote:
Can you hear the Thunder?

Only when they eat it with baked beans or radishes.......
Big Blue

FB is 6'4" and full of muscles; and his ancestors come from near Brussels.
gonnabuildabuggy

To reply the the OP, there is generally no set time frame on contract prices with supermarkets, the low inflation economy has meant that the days of the annual price review have long since gone and prices are only renegotiated when there is a need (such as a 10% fall in the value of the ).

Unilever will be hedged for internal purposes but that hedge will be coming to an end I suspect.

10% is typical of prices increases we are getting.

It may be carnage for a lot of small businesses without Tesco's muscle.
Grampa

Just on the news that they've reached agreement 'sharing the pain' but keeping the details private.
gonnabuildabuggy

Grampa wrote:
Just on the news that they've reached agreement 'sharing the pain' but keeping the details private.


Wait 2 months and see how much it goes up by. That will be the amount Tesco have had to stomach.
simonp

Dunno if it's been on before today, but Unilever just had a prime time one minute ad during Corrie telling the viewers how much money they raise for various charities.

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