Dive Brief:
- Unilever increased prices across its product portfolio by 2.3% overall in the third quarter in response to elevated commodity costs, executives said on an Oct. 28 earnings call.
- The hikes were most acutely felt within the company’s home care division, which houses brands such as fabric conditioner Comfort and dish liquid Sunlight, with prices up 3.6% overall across that portion of the portfolio, per CFO Srinivas Phatak.
- Half of the cost inflation the company has experienced is in the home care side of the business, according to Phatak. “And that is where you’ve seen a very calibrated approach, using the full levers of pack price architecture,” he said.
Unilever hikes prices as commodity cost buffer
The overall percentage price increase Unilever implemented across each of its core business divisions in Q3.
Dive Insight:
Consumer-packaged goods manufacturers have been battling surging commodity costs and economic volatility fueled by the Iran war and persistent inflation for much of this year.
Historically high costs for vegetable and palm oils have been some of the key commodities squeezing Unilever’s wallet, according to Phatak. The company also pointed to kerosene prices, logistics costs and foreign exchange rates as factors in hiking commodity spending.
Despite this, the company says supplies are normalizing, giving it better visibility on crude oil and other commodity inventories. That certainty allowed it to make an informed decision about pricing in Q3 after keeping prices relatively flat in the first half of the year, per CEO Fernando Fernandez.
“So we have been relatively cautious on pricing, until we have more clarity in terms of supply security and commodity cost environment,” CEO Fernando Fernandez said on the earnings call. “Now that we have more clarity about it, we are accelerating pricing.”
Like Unilever, other CPG companies have considered or implemented price increases as a mitigation tactic. For example, Colgate-Palmolive is offsetting higher costs with a combination of pricing and productivity improvements, CFO Stanley Sutula said on an earnings call last week.
Looking ahead, Unilever still expects there to be more cost inflation in 2027 but for it to cool as the year progresses.
“We believe that there will be some short-term pressures which will continue in crude into the near term, but into half two of next year, we should see some bit of stability coming through,” Fernandez said.
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