Unilever expects costs and prices to continue rising in 2023

Unilever has achieved double-digit growth in the past quarter, thanks to further price increases. Cost pressure will remain high in 2023, suspects outgoing CEO Alan Jope, yet the producer of Dove and Magnum will continue to invest.

Still improving margins

Sales rose by 17.8 % in the third quarter, driven by an underlying sales increase of 10.6 %. Although the producer of Knorr and Dove raised prices again by 12.5 %, volumes fell by only 1.6 %. This is much less than at its competitor Kraft Heinz, despite similar price increases.

The “billion+ euro brands”, which account for more than 50 % of the group’s sales, grew by 14 %. CEO Alan Jope, who will soon step down, said the recent restructuring was helping to “deliver consistent growth through a simpler, more category-focused operating model”. There were already reportedly “encouraging early signs” of improved accountability and faster decision-making.

For the full year, Unilever is raising its forecast. Underlying sales growth will now exceed 8 %, despite lower sales volumes. Furthermore, prices do not appear to be falling in 2023, quite the opposite. Not only does Jope believe that cost pressures will remain high next year, but Unilever is also committed to continuing to invest and even increasing investment levels. How can this be done? Through “strong pricing”. The company also plans to increase margins in 2023 and 2024, including through price increases. However, analysts have just warned Kraft Heinz that the price ceiling could be in sight.