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Unilever offers Irish retailers currency exchange mechanism to offset price increase

Musgrave has baulked at price increases of up to 19% demanded by Unilever
Musgrave has baulked at price increases of up to 19% demanded by Unilever

Unilever says it is offering a currency exchange mechanism to Irish retailers to compensate them for a price rise, which it has requested.

A spokesperson for Unilever said the mechanism would offset the price rise.

The company said it operates a currency exchange mechanism to account for fluctuations in the euro/sterling exchange rate.

It said: "The triggering of this mechanism has resulted in no overall cost price increase on the portfolio of products sold to retailers by Unilever Ireland."

A spokesperson for Irish wholesale and retail group Musgrave has confirmed that Unilever has requested a price rise and it still has not reached agreement with the company to resume supplying SuperValu and Centra. 

Musgrave remains in talks with the consumer goods manufacturer to resolve the pricing dispute, which threatens the supply of hundreds of popular items such as Lyons Tea, Ben & Jerry's ice cream, and Marmite. 

Musgrave operates the Supervalu and Centra brands and supplies independent retailers. 

It has baulked at price increases of up to 19% demanded by Unilever.

The Anglo-Dutch conglomerate previously said the increases are justified because of recent falls in the value of sterling and higher costs. 

A similar dispute between Unilever and Tesco was resolved yesterday.

Meanwhile, Tesco appeared to emerge victorious from the pricing row with Unilever, with its shares rising 4%.

Analysts said that Britain's biggest retailer had scored a public relations coup by casting itself as the consumer's champion. 

Though details of the agreement between Tesco and one of its main suppliers were not disclosed, analysts said Unilever had probably at least partially backed down in its bid to raise prices to compensate for a plunge in sterling following Britain's vote to leave the European Union.

Earlier this week, Tesco halted online sales of goods produced by Unilever, taking the unusual step of making a dispute with a major supplier public after the Anglo-Dutch group pushed for a 10% increase in prices on top-selling products such Marmite and Pot Noodle. 

After the stand-off had dominated the news agenda yesterday, both companies said the spat had been resolved.

Most analysts and economists believe sterling's recent slump - it is down about 19% against the dollar and about 16% against the euro since the June vote - will lead to higher prices, despite fierce competition between supermarkets.  

They also said the progress CEO Dave Lewis has made in turning Tesco round since joining two years ago - from Unilever - meant the company had leverage to resist supplier demands.