Prices have yet to peak, says Unilever CEO

Unilever CEO Alan Jope pictured at the World Economic Forum in May 2022.

Hollie Adams | Bloomberg | Getty Images

The CEO of the consumer goods giant Unilever said Tuesday that prices are likely to continue to rise in the near term, adding that his company has a playbook for high inflation thanks to its trading connections in markets like Argentina and Turkey.

Speaking to CNBC’s Joumanna Bercetche at the World Economic Forum in Davos, Switzerland, Alan Jope explained how his company is managing its operations in the current climate.

“Over the past 18 months, we’ve seen extraordinary pressure on input costs…it’s affecting petrochemical by-products, agriculture by-products, energy, transportation, logistics,” did he declare.

“This has been happening for some time now and we are accelerating the pace of price increases that we have had to bring to market,” he added.

“So far consumer response in terms of volume sweetness has been very muted, consumer has been very resilient,” Jope said.

“We see the prospect of higher volume elasticity if winter energy costs hit, household savings levels drop and that buffer disappears and prices continue to rise,” he said.

Last October, Unilever released its third quarter 2022 results, with the company reporting price growth of 12.5%.

Jope was asked if he foresees any moderation when it comes to inflationary pressures. “It is very difficult to predict the future of commodity markets,” he replied.

“Even if you pressure the CEOs of big oil companies, they will be a bit reluctant to give any outlook on energy prices.”

Unilever’s view, he said, was that “we know for sure that there is more inflationary pressure in our input costs.”

“We may be, right now, around peak inflation, but probably not peak price,” he continued.

“There are more awards to come, but the rate of price increases is probably peaking now.”

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Unilever has a global presence and owns brands such as Ben & Jerry’s, Magnum and Wall’s.

During her interview with CNBC, Jope spoke about the international dimension of her business and how the experience of operating in a range of markets is leading her in the current climate.

“Nobody running a business right now has really experienced global inflation, it’s been a long time since we’ve had global inflation,” he said.

“But we are used to high levels of inflation doing business in places like Argentina, Turkey or parts of Southeast Asia,” he added.

“So we have a playbook, and the playbook is that it’s important to protect the shape of the P&L at the landing price.”

“And so it’s not that we’ve taken more price, we’ve just started to act earlier than a lot of our peers, and the advice we’ve gotten from our investors is that they support that and feel that it’s is an appropriate action.”

This, Jope explained, was “something we learned from being in these high inflation markets, although…much of that inflation has historically been due to currency weakness.”

“But now these markets are dealing with the combination of commodity pressure and currency weakness, so our instinct is to move quickly when costs start to kick in.”

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