Consumer giants feel the cost of living squeeze

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29th April 2022

Bite-sized business news from the UK and beyond

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Today's stories

Consumer giants feel the cost of living squeeze
UK vegan chain bags Hollywood investment

CONSUMER
Consumer giants feel the cost of living squeeze

What’s going on?
In the latest set of trading results, two FTSE 100 consumer businesses - Sainsbury’s and Unilever - revealed that profits are coming under pressure from soaring inflation.

Why is this important?

Sainsbury’s doubled profits for the past 12 months to £730m, but said that this coming year that could drop by as much as £100m as it faces higher cost inflation. The UK’s second largest supermarket, behind Tesco, says it will forfeit profits in a bid to keep a lid on the price of consumer basics to help poorer households during the cost of living crisis.

Industry data shows that German discount chains Aldi and Lidl have gained market share this year but Sainsbury’s argues that is because their prices are going up. So people might be spending less money at Sainsbury’s, but they are buying more actual items there.

Unilever, the maker of dozens of consumer goods including Marmite, Dove soap and PG Tips, warned that the supply chain disruption caused by the war in Ukraine will mean the cost of raw materials will rise further. It said its profits would be partly protected by passing on the costs to consumers. Unilever said it raised its prices by 8% over the last three months, from 5% in the final three months of 2021.

It says that so far the price increases aren’t deterring consumers from buying their products, which is either evidence of strong brand loyalty or the fact that prices of products everywhere are going up.

Zooming out

Some companies are better placed to deal with rising cost inflation than others. Those, like Unilever, who have pricing power due to their strong brands can pass on extra costs to customers without too much of an impact on demand. Others, like Sainsbury’s, who operate in highly competitive industries have to absorb the cost pressure and live with lower profits.

Other stories to keep you in the loop

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Amazon sees first loss since 2015 as shares tumble 10%
UK kickstarts work on new trade deal with Switzerland
Daily Facebook users up again after first-ever decline
Barclays warns inflation and cost of living crisis is hurting customers
Indian billionaire planning Boots takeover bid with US private equity firm
Twitter admits it overstated users for years ahead of Elon Musk takeover
Elon Musk sells almost $4bn worth of Tesla shares

FOOD
UK vegan chain bags Hollywood investment

Plant-based fast food chain Neat Burger has completed its latest fundraising round with an undisclosed investment from Hollywood actor Leonardo DiCaprio.

The company, which has already been backed by Formula One driver Lewis Hamilton, said DiCaprio had joined the business as a strategic investor.

Launched in 2019, Neat Burger’s mission is serve sustainable fast food that appeals to vegans and meat eaters alike, with a fraction of the carbon footprint of its meat equivalents.

The new funding will be used invest in new product development and grow the workforce. The company has ambitious plans to expand its restaurant footprint and launch a supermarket range.

At the moment it has sites in London and a pop-up site in New York, but plans to reach 42 locations globally by the end of the year, then 436 by 2026 and 1,000 by 2030.

Stat of the day

Nelly Furtado has struck a deal to sell her music back catalogue of a reported $50m

Interesting links from around the web

How to build wealth when you don’t come from money
18 ways to customise your Gmail inbox to increase efficiency and decrease clutter
What happens once you've fulfilled your life’s dream

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Consumer giants feel the cost of living squeeze

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