Unilever and Tesco

I was going to start this blog post with a bit about Unilever’s massive profits so I googled “Unilever Profit 2015” and up popped their entire published financial statement for the year.   It made for interesting reading until I got to the point where the CEO said

We are further strengthening our innovation funnel while shortening innovation cycle times, stepping up our digital capabilities and rolling out a global zero based budgeting programme.

Innovation funnel?!  What the hell is that about?

Bottom line is that Unilever are doing alright.  Despite  “slower global economic growth, intensifying geopolitical instability, and high currency and commodity volatility” as a company Unilever are making a tidy profit.  In the billions.    Whilst many companies are not, where they are having to lay people off.  Where margins are being squeezed daily.

I have my own company and what I am able to charge companies has dropped over the past year.  Partly due to their being hundreds more bloggers to choose from now, and partly because companies have had to squeeze their advertising budgets.  The market is tougher and that is a good thing.  Competition is good.  And that is something that Unilever could do well to remember.

Their announcement that they are demanding an extra 10% from high street supermarket Tesco is tantamount to daylight robbery.   Rightly, this week Tesco have said “no chance” and are now displaying “item not available” for Unilever products on their website.  It is likely that shelves in stores will soon be empty too.   And how long before other supermarkets follow suit because I can’t imagine this is Unilever just having a lover’s tiff with Tesco because the latter’s CEO, Dave Lewis, used to be president of Unilever’s personal care division.

It’s bullying.

Pure and simple.  It is Unilever bullying you and I, the people that buy their products and I for one am grateful that Tesco have said “No”.   They can dress it up as being for post-Brexit economic reasons but it isn’t.   People more financially astute than me have commented that much of their raw materials are home grown so they aren’t importing goods.   They are doing it because they think they can, they think Tesco will bow down to them rather than having empty shelves.   They think shoppers will take the price hikes lying down.    Which is bullying.

You can bet your bottom Dollar that if a supplier to Unilever is asking for a price hike of 10% Unilever is telling them to jog on.  They will be refusing and telling the supplier to find other ways to cut their costs to enable them to keep supplying Unilever at the price they always have.

 Now, more than ever, our £ is buying us less and less.   Interest rates on our savings are down to a point they are virtually non-existent, and fuel prices are creeping up again.   House prices are going through the roof, train fares are up above inflation, and don’t get me started on what is happening with the Euro.

None of those things are things we can control.   If diesel creeps up to £2 a litre I have no choice but to still buy it, despite it once being £1.09.   I need diesel in my car regardless of the cost.

What I don’t need though are Unilever products.   Regardless of what Unilever might think we can all live without their stuff, there is an alternative.  Whether it is PG Tips, Lynx, Persil, or even Marmite.   There are alternatives and whilst multi-nationals might think we are loyal to a brand when it comes to the crunch, no we aren’t.    We will change supermarkets at the drop of a hat (look at the market share Lidl and Aldi have nabbed since joining our high street) and we will think nothing of changing brands if there is a deal on for an alternative.    And whilst Unilever are stamping their feet in the corner, we, the consumers are doing what we do to any toddler having a tantrum, ignoring them.

Unilever would do well to remember that before next year’s financial statement means that funnel is connected to the rest of a sinking ship.

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