The prices have not yet peaked, says the Unilever boss

Unilever CEO Alan Jope photographed 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 rise further in the near term, adding that his firm has a playbook for high inflation thanks to its operations in markets like Argentina and Turkey.

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

“In the last 18 months, we’ve seen exceptional input cost pressures…spanning petrochemical derivatives, agricultural derivatives, energy, transportation and logistics,” he said.

“It’s been around for quite some time and we’ve accelerated the rate of price increases we’ve had to bring to market,” he added.

“So far, the consumer response to volume softness has been very muted, the consumer has been very resilient,” Jope said.

“We see the prospect of higher volume elasticity as winter energy costs come down, household savings rates fall and that buffer wears off and prices continue to rise,” he said.

Unilever CEO: Inflation is at its peak, but more price hikes are yet to come

Last October, Unilever released its results for the third quarter of 2022 fixed report price growth of 12.5%.

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

“Even if you pressure oil company CEOs, they’re going to be a little reluctant to give an outlook on energy prices.”

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

“We could be near peak inflation right now, but probably not at peak prices,” he continued.

“More prices have yet to be set, but the rate of price increase is likely to peak now.”

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

During his interview with CNBC, Jope addressed the international dimension of his business and how the experience of operating in a range of markets has steered it through the current climate.

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

“But we are used to high inflation rates because we do business in countries like Argentina, Turkey or parts of Southeast Asia,” he added.

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

“And it’s not that we took more price, we just started trading earlier than many of our peers and the guidance we’ve had from our investors is that they support this and feel that this is an appropriate measure.”

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

“But now these markets are having to deal with the combination of commodity pressures and currency weakness. So our instinct is to act quickly when the costs hit.”

https://www.cnbc.com/2023/01/17/prices-have-not-peaked-yet-says-unilever-ceo.html The prices have not yet peaked, says the Unilever boss

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