The fact that the ingredients of Marmite, one of the products at the centre of a price row between Tesco and Unilever, are manufactured in the UK calls into question why the drop in the pound should cause a hike in its price, but its brand power gives the supplier strength in the argument.
The global consumer goods company is said to have demanded steep price increases on its products, including Marmite, from the supermarket to offset the higher cost of imported commodities, which are priced in euros and dollars, following the drop in the pound.
Tesco retaliated by removing products from its website and warning that if the dispute dragged on, items could disappear from supermarket shelves. However many of the products affected are manufactured in the UK.
Marmite, which is one of the products that Tesco is said to be running low on, is exclusively produced in one factory in Burton-upon-Trent, Staffordshire. Marmite, which was invented by German scientist Justus von Liebig in the late 19th century, has been produced in the town since 1902.
Although the exact recipe of Marmite is a trade secret, the main ingredients of the spread are manufactured in the UK including yeast extract, vegetable and spices.
Burton’s brewing heritage is one of the reasons for the location of the factory, because yeast extract is a waste product in the process of making beer. There were once 30 breweries in the surrounding area but now the raw materials come from across the country.
The pound has fallen 17% since Britain voted to leave the EU. Ahead of the referendum, experts warned that Brexit could cause food prices to rise, but this caution was dismissed by leave campaigners as “scaremongering”.
On BBC Newsnight on Wednesday night, Christopher Haskins, former chair of Northern Foods – who supported the remain campaign – said the dispute was just the beginning of food price rises thanks to Brexit.
“We can expect food inflation of around 5% in 12 months,” he told presenter Emily Maitlis on the show.
“We won’t see Marmite disappear from the shelves and this is why Unilever will win.”
People will grumble at the price rise but will still buy it, he added, such is the strength of certain brands.
Other popular British brands owned by Unilever – including Colman’s, Elmlea and Pot Noodle – are also set to be in short supply at the supermarket chain.
Colman’s products, including its famous English mustard, are produced at a factory in Norwich, while Elmlea, the cream alternative made from buttermilk and vegetable oil, is produced at Unilever’s food factory in Purfleet, Essex. Pot Noodles have been produced in Crumlin, south Wales since 1979.
