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Given the plunge in the pound, Top Products suppliers are now grappling with escalated pricing tensions. But is this kitchen sink drama being dialled up into something more dramatic than it will turn out to be? Or is inflation going to mess up things up?
In grocery as in politics, 2016 will be remembered as a year of bust-ups. The big four have continued to fight the discounters (with mixed results). Retailers have locked horns with suppliers over range rationalisation strategies. And the biggest bust-up of all - Brexit - looks like shaping the market for the rest of the decade and beyond. But what does Brexit mean for Britain’s Top Products? Supplier demands for price rises to cover currency-related cost increases have already hit the headlines and will lead to many more tense conversations with their retail customers in the weeks and months ahead. Suppliers who misjudge their approach to pricing negotiations risk an additional bust-up - with the public.
Four commodities set to increase in price…
…and one commodity set to benefit
Top five category bust-ups
Top five fastest growing products
Top five fastest falling products
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The price of food has become more politicised than at any point in recent memory and reputations are on the line for businesses that lose the PR war. The Eurosceptic tabloid press gleefully cast ‘Anglo-Dutch giant’ Unilever as the European bad guy in its efforts to push through price increases with Tesco, whose British heritage was repeatedly referenced in articles. Unilever took some hits for what some media commentators described as its use of Brexit and the weaker pound as “a smokescreen” for “fleecing” UK consumers. You could argue the resulting 61% spike in sales of Marmite meant Unilever won the war, but it seems doubtful many suppliers will be willing to risk a public backlash. Far from being cowed by the prospect of Brexit, if anything consumers seem emboldened by the vote to leave the EU. Mike Watkins, Nielsen’s UK head of retailer and business insight, predicts a lucrative Christmas with consumers trading up and spreading their spend between different retailers. “Consumer confidence remains high at the moment,” he says. “They have felt OK about their job prospects, comfortable with their disposable income and comfortable about spending, and we don’t see that changing in the near future. We should expect a continuation of volume growth over the next six to 12 months.”