MarmiteGate…How Not to Implement a Price Hike

This post was written and posted as part of my new role with PRgloo. I’m posting here for anyone who may not be familiar with PRgloo and is missing out on the easiest public relations software out there today.

marmiteIn 1902 the Marmite Food Extract Company was formed with Marmite as the main product. Marmite is concentrated brewer’s yeast, invented by accident as a by-product of the beer making process.  It has become part of the culinary fabric of Great Britain.

Marmite is beloved. Say Marmite to most Britons and the response is “Yum” or some other happy place response.  So don’t mess with the Marmite.

Brexit did not get that memo and messed with the Marmite.

Earlier this month Unilever let retailers know it was raising prices on common consumer products including Ben & Jerry’s ice cream, shampoo and Marmite. While some retailers are still in negotiations with Unilever it ended up in a deadlock with Tesco.  In response Unilever pulled its products from all Tesco stores.

As you might expect this did not go unnoticed by the media or the public…and soon #Marmitegate was trending.

Here is where Unilever lost favor with consumers. Social media exposure supported Tesco and revealed how price hikes are passed on to retailers. In their anger and disgust consumers threatened to boycott Marmite.

Unilever pointed to the fall of the pound negatively impacting their profit margin. The competitive British consumer market means Tesco can’t afford to alienate consumers with significant price increases. Tesco took a stand and refused to pass on the price increase.

Tesco and Unilever have since come to an agreement and prices of the products are not going to change, right now. However Tesco’s John Allan has warned that prices overall will rise 3% in the near future.

This is one example of the outcome of the Brexit decision, but it also highlights the power of social media and consumer relationships with brands. In this case Tesco appears to have taken a stand for its customers and won. Prices remain the same.

Unilever comes out of this with a bloody nose appearing to be purely profit driven. Could this have been handled better? Definitely. Basic communication with consumers would have avoided the sting and what appeared to be an attempt to strong arm consumers into a price hike.

The reality is Brexit will impact prices, but for now Marmite is safely back on the shelves at Tesco.

We know change is afoot with Brexit. What brands should be hyper-aware of is that a lack of transparency and poor communication will boomerang. Get your communications plan, messaging and lines-to-take in order: there is a rough road ahead.

PRgloo can help you stay organized. And remember….

Don’t mess with the Marmite.

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