Love or hate it: Marmite becomes symbol of Brexit impact

AP News
Posted: Oct 13, 2016 2:08 PM
Love or hate it: Marmite becomes symbol of Brexit impact

LONDON (AP) — Philip Walker spreads Marmite on his daily crumpet and stockpiles jars of the yeast spread. He's a fan, and he's upset at plans to raise the price of this icon of the British breakfast table.

Love it or hate it, Marmite has become the most visible sign yet of Britain's decision to leave the European Union after consumer goods giant Unilever sought to raise wholesale prices for its products by a reported 10 percent to make up for a plunge in the pound.

Tesco, the U.K.'s biggest supermarket chain, rejected the increase and this week removed many Unilever products from its website. #Marmitegate was soon trending on social media.

Though the sides solved the dispute Thursday, experts say it's inevitable that food prices will rise. The issue has for the first time driven home the reality that daily life will be affected by "Brexit."

"I am more angry at Unilever than I am at Tesco," said Walker, a 43-year-old regional manager for St. John Ambulance. "It seems Unilever is using Brexit as an excuse to hold Tesco customers to ransom."

Since Britons voted June 23 to exit the EU, the pound has dropped more than 18 percent against the dollar and almost as much against the euro. While for weeks the impact had been felt mainly by Britons spending abroad, the currency's plunge is making imported goods spikes higher.

Unilever, which is based in the Netherlands and besides Marmite makes Dove soap, Ben & Jerry's and Magnum ice cream and Persil laundry powder, is the first company whose efforts to pass these costs onto its customers have become public.

"This is the first warning sign of there being a real change," said Patrick O'Brien, content director at Verdict.retail, who predicts a future with many spirited negotiations between retailers and suppliers. "Someone has to pay."

That tension is exacerbated in the supermarket business, where there is already huge competition between chains over who has the lowest prices. Mainstream retailers like Tesco and Sainsbury's are struggling to fend off discounters including Lidl and Aldi.

Supermarkets are essentially playing a game of chicken over who can hold off hiking their prices the longest. The upshot is that food prices have not yet jumped by as much as the pound's plunge would suggest, though analysts say it's only a matter of when.

Brexit has thrown a "huge wobble" into the equation, said Christopher Haskins, who built Northern Foods into a major supermarket supplier.

"Undoubtedly what Unilever is doing is justified in terms of the economics of it, but Tesco's worried that Aldi may not follow suit," Haskins, who now sits in the House of Lords, told the BBC.

Shoppers searching Tesco's website on Thursday for Unilever products were greeted with the same message: "Sorry, this product is currently not available." Though the companies said they had solved the pricing dispute, the goods were not yet back on the website as of Thursday evening.

But it was Marmite, a distinctly British product, that seized the public imagination. The spread, made from concentrated brewer's yeast, has become entwined in the national psyche since it was first produced in Burton-on-Trent, England, in 1902. Unilever acquired the brand in 2000.

People could grasp the idea that this breakfast staple might suddenly become very expensive. In a discussion that has centered on national growth rates, inflation and currency fluctuations, Marmite could be understood by all.

And the public noticed. The very entrepreneurial put their yellow and green jars of Marmite on eBay. One seller offered a used jar for 4 million pounds ($4.8 million), plus postage, with the description "But there's still some left. Otherwise good condition."

The matter even rose to the attention of Parliament. Pete Wishart, the Scottish National Party's leader in the House of Commons, urged the government to reconsider its plans for a "full English Brexit."

"Who would have thought that the first casualty of this hard Brexit would be the nation's supplies of Marmite?" he said as lawmakers discussed the issue.

James Smith, a 31-year-old teacher from Liverpool, took a photo of the brown-stained Marmite tub in his refrigerator and said he was "very grateful" to have some on hand.

All this despite there being no actual shortage of Marmite in stores.

Just outside a Tesco in London, Mackenzie Leary, 24, said it was the price increases that were most worrying.

"I think prices are going up every day. Even the cheaper stores like Lidl seem to be getting more expensive, so I think actually, yeah, it will probably impact a lot of people and they might struggle," she said. "I don't even like Marmite."