Written by James Hayward, Practitioner at LI Europe.

marmite-puzzleTesco and Unilever had a disagreement not so long ago which led, when Tesco refused to accept a price increase, to Marmite being unavailable on Tesco’s website and a Marmite drought on Tesco supermarket shelves.  The Tesco-Unilever dispute was quickly resolved, but it was a sign of things to come and, love it or hate it, a few weeks later Marmite was making headlines again.  This time it was due to Morrisons raising their Marmite price by 12.5%.  But that wasn’t the end.  Later on the same day, Typhoo announced that they were in discussions with supermarkets about price rises.  This is a pattern that is set to continue.

We had been warned that this would happen.  The British Retail Consortium told us that the impact of the falling pound would eventually result in higher prices.  The International Trade Minister, Mark Garnier, has said that this is a ‘well predicted effect’.  Of course, it’s all to do with Brexit and isn’t going to end any time soon.

So the falling pound is bad news for Marmite lovers and tea drinkers, but what does it mean to food manufacturing businesses?  Is it a threat or is it an opportunity?  If prices of raw materials go up, then how will inefficient factories, with high levels of waste, fare against more efficient factories with low levels of waste?  If all else stays the same, any gap in the financial performance of the two factories will grow.  As time goes on, pressure will rise and things could get….difficult.  Now, more than ever, factory managers need to boost their improvement programs.

If you’re concerned about how you’re factory is performing in the post-referendum Britain, then please get in touch for a free no-obligation discussion.