MENU

Unilever not powerful enough for Coles & Woolworths

A report in Fairfax Media’s (ASX: FXJ) Sydney Morning Herald suggests that the pressure placed on suppliers by supermarket chains Coles, owned by Wesfarmers (ASX: WES), and Woolworths (ASX: WOW) is even affecting the Netherlands-based global giant Unilever (AMS: UNIA).

Unilever owns over 1,000 household consumer brands including Lipton and Bushells tea, Pears and Lux soap, Streets ice cream and Lynx deodorant.

While Coca-Cola Amatil (ASX: CCL) CEO Mr Terry Davis has previously spoken out regarding the conduct of the supermarkets towards suppliers and their margins, until now it has generally been smaller food and beverage producers such as Freedom Foods (ASX: FNP) that have been considered more exposed to these pressures.

The latest accounts lodged by Unilever show revenue has stalled and profits fell in 2012; however, 2011 profit was reportedly inflated by assets sales. The stalled revenue line suggests that either the supermarkets’ own private label products have been growing at the expense of Unilever’s branded products or that Unilever has been forced to give up margin and sell more volume just to hold revenues constant. Most likely it is some combination of the two.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.