* Tesco and Unilever had clashed over pricing after Brexit
* Marmite, PG Tips sales halted on Tesco website
* Other big four grocers face price demands
* Tesco, Unilever shares down
(Updates with row settled)
By James Davey and Martinne Geller
LONDON, Oct 13 Britain's biggest retailer, Tesco
, settled a pricing row with Unilever after
halting online sales of goods produced by the Anglo-Dutch giant
in a dispute caused by a plunge in the pound since Britons voted
to leave the EU.
The dispute between Tesco and one of the world's largest
consumer goods companies was a first clear sign for consumers of
the turbulence unleashed by the Brexit vote and of how it could
Products such as Persil washing powder, Ben & Jerry's ice
cream and Marmite - a brown yeast-extract spread with a
like-it-or-loathe-it reputation - had been unavailable on the
website of Britain's largest online grocer on Thursday.
Both sides declared the spat over on Thursday. "We're
pleased this situation has been resolved to our satisfaction," a
Tesco spokesman said. Unilever also said the supply situation in
Britain and Ireland had been successfully resolved.
The June 23 vote to leave the EU took many investors and
company executives by surprise, unleashing the biggest one-day
fall in sterling against the dollar.
The pound's fall -- it is down 19 percent against the U.S.
currency and about 16 percent against the euro -- has left
suppliers and retailers battling for profits as imported goods
become more expensive.
That fight appeared to spread to supermarket shelves.
Supervalu, Ireland's largest supermarket, said it was also
holding negotiations with Unilever over pricing and could
"experience some supply issues on certain Unilever products".
Bruno Monteyne, a former senior Tesco executive who is now
an analyst at Bernstein, said Tesco has typically one to two
"While politicians can deny reality, a shampoo produced on
the continent is now 17 percent more expensive," he said. "This
isn't about Tesco or Unilever but about all UK retailers and
Tesco and Unilever stock fell 2.2 and 3.5 percent
High street stalwart WH Smith said separately it
would look to consolidate factories and negotiate better prices
with suppliers to cut costs.
"If people are worried about losing Marmite from Tesco, wait
until they find out about jobs...," said Wes Streeting, a
lawmaker from the opposition Labour Party who backed the Remain
campaign in the June 23 referendum.
The pricing row reflected the tensions building throughout
the system, with Tesco the one retailer big enough to push back
against Unilever's demands and Unilever one of the only
suppliers powerful enough to stand its ground.
The standoff dominated the news in Britain on Thursday, with
"Marmitegate" trending on Twitter and "Marmite Wars" splashed on
the front pages. The Daily Mail dubbed it "Brexit Blackmail.
It also has a personal dimension as Tesco boss Dave Lewis
was previously a senior executive at Unilever, where his radical
overhaul of the firm's businesses won him the nickname "Drastic
An executive at a rival consumer goods company that has not
pushed for UK price increases said it was "absolutely brilliant
positioning" by Tesco and no coincidence that the news broke on
Wednesday, the eve of Unilever publishing financial results
showing better-than-expected sales growth due to pricing.
"This makes Dave Lewis look like a hero defending
consumers," the person said.
Two people familiar with the situation said Unilever had
demanded 10 percent rises in the prices it charges Britain's big
four supermarkets -- Tesco, Sainsbury's, Asda
and Morrisons -- across a wide range of goods.
One said no other big consumer goods company had been as
aggressive as Unilever on price demands while the second source
said they had protested against Unilever's demands as some of
the products were made in Britain.
The sources said two of the big four were still weighing
whether to accept the rises or scrap some products.
Unilever Chief Financial Officer Graeme Pitkethly said the
increases were "substantially less" than what was needed to
cover the hit from the pound's fall. "We are confident that this
situation will be resolved pretty quickly," he said.
Tesco is rebuilding itself after a 2014 scandal when it
acknowledged overstating profits and pressuring its suppliers
into driving down prices. Last week Lewis hailed a transformed
relationship with suppliers as a factor in the grocer reporting
a 60 percent rise in first-half profit.
But he indicated it was not a given that suppliers should be
able to recoup the cost of the falling pound as they had not
always passed on benefits when sterling was much stronger.
Most analysts and economists believe sterling's slump will
lead to higher grocery prices, following years of deflation
because of a price war between the big chains.
(Additional reporting by Kylie MacLellan and Helen Reid,
Writing by Kate Holton, Editing by Anna Willard, Timothy
Heritage and David Stamp)