LONDON Oct 14 Tesco appeared to emerge
victorious from a pricing row with Unilever on Friday, with its
shares rising 4 percent and analysts saying Britain's biggest
retailer had scored a public relations coup by casting itself as
the consumer's champion.
Though details of the agreement between the supermarket
group and one of its main suppliers were not disclosed, analysts
said Unilever had probably at least partially backed down in its
bid to raise prices to compensate for a plunge in sterling
following Britain's vote to leave the European Union.
"For the first time in many years, Tesco is coming across as
the consumer champion and in the popular press is being reported
as the company fighting to keep prices low for shoppers. This is
good news for Tesco," said HSBC analyst David McCarthy, who has
a "hold" rating on the stock.
On Wednesday, Tesco halted online sales of goods
produced by Unilever, taking the unusual step of making
a dispute with a major supplier public after the Anglo-Dutch
group pushed for a 10 percent increase in prices on top-selling
products such Marmite and Pot Noodle.
On Thursday, after the standoff had dominated the news
agenda, both companies said the spat had been resolved.
Friday's newspapers laid the blame for the row firmly at
Unilever's door. A front page headline on The Sun, Britain's
biggest selling newspaper, was "Greedy Marmite bosses back off",
while The Daily Mail went with: "The Great Marmite Scam,"
blaming Unilever for exploiting the Brexit vote to hike prices
and highlighting that some of the products it was demanding
price rises for were actually made in Britain.
Most analysts and economists believe sterling's recent slump
- it is down about 19 percent against the dollar and about 16
percent against the euro since the June vote - will lead to
higher prices, despite fierce competition between supermarkets.
"(Tesco) highlighting the fact that the suppliers are
driving the inflation is a good way forward to prepare the
consumer for the inflation - it blames Brexit rather than
Tesco," said David Sables, CEO of Sentinel Management
Consultants, a firm that coaches major suppliers on how to
negotiate with big UK grocers.
Analysts also said the progress CEO Dave Lewis has made in
turning Tesco round since joining two years ago - from Unilever
- meant the company had leverage to resist supplier demands.
Tesco has a 28 percent share of the UK grocery market.
"Tesco is well placed to do so, as it is delivering the best
volume growth to most of its suppliers," said McCarthy.
"It is harder for Tesco's mainstream competitors
(Sainsbury's, Asda and Morrisons ) who
are not delivering anywhere near the volume growth and therefore
will have much less to negotiate with."
At 0945 GMT, Tesco shares were up 4.2 percent at 203.3
pence, the biggest rise on Britain's blue-chip FTSE-100 index.
Unilever shares were down 0.7 percent.
(Editing by Mark Potter)