ABF warns it could follow Unilever in push on prices

More Marmitegate-style disputes could be on the horizon as Associated British Foods today warned supermarket prices are likely to rise in the near future.

After the pound’s plunge against the dollar, consumer goods giant Unilever attempted to push through price increases, resulting in a spat with Tesco dubbed Marmitegate.

ABF, one of the world’s largest sugar producers and maker of Twinings tea and Ryvita, did not give details of discussions with customers, but said price rises were likely to be coming down the line.

“There is cost pressure in the system and I’d be a fool to deny it,” chief executive George Weston said. “Food has been going down in price the last couple of years… so there will be some price increases.”

Weston’s comments came as ABF beat expectations with full-year revenue up 4% to £13.4 billion. Adjusted pre-tax profit was 5% higher at £1.07 billion.

Sales at Primark rose 9% to almost £6 billion, though UK same-store sales were down 2%. Weston said trading in the new year was going well.

ABF reiterated a promise Primark prices would not rise to offset the pound’s fall since the EU referendum. While Brexit created uncertainty, there were potential upsides in new trade agreements and policy.

Sterling’s weakness also provided UK food producers with “significant opportunities to replace imported food and build export markets”.

The shares rose 143p to 2632p.