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The Unilever effect - Four months on from Brexit, is the trade beginning to feel the bite?

Published:  14 October, 2016

As Brexit and the drop in the value of the pound takes it's toll on Tesco, what's next for retailers?

FMCG giant Unilever hit the headlines this week for getting into a scuffle with Tesco over plans to put its prices up by 10%.

The Marmite producer blamed Brexit and the devaluation of the pound.

Under pressure from the discounters to keep prices low, Tesco initially refused to comply with Unilever's demands, but both companies have since announced they have resolved their issues.

Marmite returned to Tesco's website and consumers everywhere rejoiced.

As the dispute was going on, some accused Unilever of using Brexit as an excuse to hike wholesale prices, but Unilever isn't alone in its decision - or its timing.

Andy Lundy, MD of independent merchants Vino in Edinburgh, is currently drafting letters to his customers about inevitable price increases.

Vino has tried to delay this for as long as possible, Lundy said - but they are now beginning to feel the bite.

"Two of our biggest suppliers have hedged their cash flow and brought in advance and this has been of benefit to us. We've tried as hard as we can, but it's come to the point where we're going to have to put our prices up," Lundy explained.

As prices increase, retailers will inevitably have to rethink their ranges, and as a result, customers will begin to see alternatives on the shelves.

Lundy explained: "We'll try to mitigate the impact by buying differently. If a certain wine becomes untenable, then we'll have to replace it with something that is."

When it comes to Unilever being dishonest about the reasons for its new pricing strategy, Lundy says he has "zero sympathy" for Tesco, partly because of 2014's accounting scandal in which the retailer was accused of grossly overstating its figures.

Three Tesco bosses currently face serious fraud charges in relation to the accusations.

Since the scandal, Brexit has changed the business climate irrevocably, and as consumers see price start to creep up, transparency is more important than ever.

"We've always been honest with our pricing," Lundy said. "But ultimately we can't absorb the growing costs. Vino has 25 members of staff and we can't put that in danger to supplement consumers' wine buying habits."