…By Joseph Benjamin for TDPel Media.
Unilever, the owner of brands such as Marmite and Magnum, has reported strong sales growth of 10.5% to €14.8bn in Q1 2023.
The increase was driven entirely by higher prices, although the volume of goods sold fell slightly by 0.2%.
This sales growth surpassed City expectations of 7.5%.
CEO Alan Jope attributed the growth to responsible pricing and added that the rate of price increases for many Unilever products had peaked, but he doesn’t expect prices to fall.
However, with dairy costs up by 22% and cocoa up 50%, significant increases in the price of ice cream may be on the horizon.
Jope suggested that European customers were more resistant to price changes compared to those in other regions, due to the region’s low-inflation environment over the past decade.
He said that there had been almost no price growth in Europe during this time, which meant that the shift from deflation to inflation was felt strongly in the region.
Jope also stated that Unilever preferred to ‘shrinkflate’ rather than raise prices.
The company had been accused of ‘shrinkflation’ after the number of ice creams in a Magnum multipack was reduced from four to three.
Unilever counts changes in product composition and size as pricing changes rather than changes in volume.
Steve Clayton, head of equity funds at Hargreaves Lansdown, called the sales figures “forecast-beating,” and said that Unilever was adept at navigating the challenging inflationary environment.