The food group Unilever, known for its brands such as Knorr, Magnum and Rexona, warns that the prices of all product types in supermarkets will continue to increase in 2023. The company says raw material costs will certainly continue to rise in the first half of the year, and a large part of these higher costs will be passed on to customers.
“We are past the peak of inflation, but the peak of prices is yet to come,” said Unilever CEO Alan Jope.
The group increased prices by an average of 11 percent last year, an unprecedented price increase. Products from ice cream to body lotion have become more expensive everywhere.
more profit
Despite these rising costs, Unilever had a peak year. Profit rose to 8.3 billion euros quarter-on-quarter, helped by currency effects and sales of tea brands. Profits are significantly higher than in recent years. In the last 10 years, only 2018 has seen more snow.
Although these higher prices put some customers off, more money came in overall. The company sold 2 percent fewer products, but 14.5 percent more.
profit margin
In an interview with journalists, Jope was asked several times whether the profit was too high, given the struggle of some households to pay the bills. Joe rejects this criticism.
He says the company passes only 75 percent of the higher costs to customers. Also, if Unilever raises prices too much, supermarkets won’t accept it. “They want to see evidence that our costs are actually going up,” Jope says.
He also points out that the group’s profit margins have plummeted and major shareholders have decided to cut the margin.
“Our shareholders are mostly ordinary people,” says Joe. “They invest in Unilever through their pension funds and thus benefit from higher profits.”
Unilever expects price increases to ease in the second half of 2023. How much prices will rise next depends primarily on demand from China and crop yields in the first few months of the year, according to Unilever.
According to the company, there is no mention of a price drop.
Alan Jope will leave Unilever this year. His successor is the Dutchman Hein Schumacher.
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
