Supermarkets join Tesco's Marmite price war with Unilever

Tesco (Frankfurt: 852647 - news) is not alone in its price battle with a major supplier, which has resulted in the chain failing to restock many top household brands.

Other supermarkets have told Sky News they are having similar talks on price with Unilever (NYSE: UL - news) , which is understood to have sought to add 10% to its wholesale prices.

Such a move would help ease the effects of the 17% hit to sterling's value since the UK's vote to leave the EU - a shift that has added to the cost of importing goods.

The dispute with Tesco resulted in the supermarket reporting " availability issues " with scores of Unilever products on Wednesday night - with many shown to be "unavailable" on its website.

Unilever is behind scores of popular brands such as Marmite, Ben & Jerry's ice cream, Dove soap, Hellmann's mayonnaise, Flora and PG Tips - some of which are made in the UK but may have imported ingredients.

Tesco has said it will continue to sell Unilever goods in its stores until stocks run out, but that it hopes to have the issue resolved quickly.

:: Marmite the new frontline in Brexit war

The row comes at a sensitive time for major supermarket chains as they continue to hold down prices to compete with hard discounters.

The price issue has been trending on social media under #marmitegate and #marmageddon - with a "used" jar of the popular yeast extract even appearing on eBay for £100,000.

There has been a backlash - largely directed at Unilever amid accusations it is cashing in on the Brexit vote.

The company moved to explain its position following a planned update on its progress to the City on Thursday.

It reported a 0.1% fall in quarterly sales at current currency rates - reflecting a foreign currency hit between July and September - the period immediately after the EU referendum.

The company's chief financial officer, Graeme Pitkethly, told a conference call with analysts: "The price increases we are passing on are lower than the impact on our own profitability.

"We care deeply about the customer affordability of our brands, but we do not set the prices charged to consumers."

While he did not mention Tesco by name he added: "We are confident that the situation will be resolved pretty quickly."

GMB, the union for workers at Unilever, called on the company to ensure its members did not "bear the brunt" of the company's currency woes.

The dispute amounts to a battle of wills and could mark the start of what economists had warned about before the vote; that a Leave win could result in price rises in stores as imported goods are made more expensive by the weak pound.

An extra element in the row between Tesco and Unilever is that the supermarket's boss, Dave Lewis, spent most of his career with Unilever.

Neil Wilson, markets analyst at ETX Capital, said "Shares (Berlin: DI6.BE - news) in Unilever and Tesco opened lower this morning as investors punished the FTSE giants for squabbling.

"Tesco may simply be trying to call Unilever's bluff over price hikes but markets are not impressed."

Politicians have largely stayed out of the controversy so far but Labour's Shadow Business Secretary, Clive Lewis, released a statement saying the difficulties were down to a "Tory failure to make any contingency plans for Brexit".

"This is unlikely to stop at a Marmite shortage," he said.

"More and more retailers are going to be squeezed by higher import prices in the coming months, as hedging contracts end and the cheaper pound starts to squeeze margins."