Unilever rues Brexit currency hit amid Tesco 'Marmite wars' row

Unilever (NYSE: UL - news) , maker of products such as Marmite and Pot Noodles, has sought to explain the currency hit at the heart of its dispute with Tesco (Frankfurt: 852647 - news) .

It is believed the company is at loggerheads with top supermarket retailers over a demand they accept a 10% increase in wholesale costs to account for the 17% hit to sterling's value since the UK's vote to leave the EU.

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

Unilever is behind scores of household brands such as Ben & Jerry's ice cream, Dove soap, Hellmann's mayonnaise, Flora and PG Tips.

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.

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

Unilever reported on Thursday 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."

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."