Marmite becomes Brexit symbol amid fall of British pound

Marmite has become the most visible sign yet of Britain's decision to leave the European Union after consumer giant Unilever sought to raise wholesale prices for its products by a reported 10 per cent following a sharp drop in the pound.

Tumble of British pound now sending up cost of good imported into U.K.

Jars of savoury spread Marmite, which is owned by the Anglo-Dutch multinational Unilever, on sale in a branch of Tesco in central London, Thursday. (Alastair Grant/Associated Press)

Philip Walker spreads Marmite on his daily crumpet and stockpiles jars of the yeast spread. He's a fan, and he's upset at plans to raise the price of this icon of the British breakfast table.

Love it or hate it, Marmite has become the most visible sign yet of Britain's decision to leave the European Union after consumer goods giant Unilever sought to raise wholesale prices for its products by a reported 10 per cent to make up for a plunge in the pound.

Tesco, the U.K.'s biggest supermarket chain, rejected the increase and this week removed many Unilever products from its website. #Marmitegate was soon trending on social media.

Though the sides solved the dispute Thursday, experts say it's inevitable that food prices will rise. The issue has for the first time driven home the reality that daily life will be affected by "Brexit."

"I am more angry at Unilever than I am at Tesco," said Walker, a 43-year-old regional manager for St. John Ambulance. "It seems Unilever is using Brexit as an excuse to hold Tesco customers to ransom."

Since Britons voted June 23 to exit the EU, the pound has dropped more than 18 per cent against the dollar and almost as much against the euro. While for weeks the impact had been felt mainly by Britons spending abroad, the currency's plunge is making imported goods spikes higher.

Trying to pass along costs

Unilever, which is based in the Netherlands and besides Marmite makes Dove soap, Ben & Jerry's and Magnum ice cream and Persil laundry powder, is the first company whose efforts to pass these costs onto its customers have become public.

"This is the first warning sign of there being a real change," said Patrick O'Brien, content director at Verdict.retail, who predicts a future with many spirited negotiations between retailers and suppliers. "Someone has to pay."

That tension is exacerbated in the supermarket business, where there is already huge competition between chains over who has the lowest prices. Mainstream retailers like Tesco and Sainsbury's are struggling to fend off discounters including Lidl and Aldi.

Supermarkets are essentially playing a game of chicken over who can hold off hiking their prices the longest. The upshot is that food prices have not yet jumped by as much as the pound's plunge would suggest, though analysts say it's only a matter of when.

Brexit has thrown a "huge wobble" into the equation, said Christopher Haskins, who built Northern Foods into a major supermarket supplier.

"Undoubtedly what Unilever is doing is justified in terms of the economics of it, but Tesco's worried that Aldi may not follow suit," Haskins, who now sits in the House of Lords, told the BBC.

Shoppers searching Tesco's website on Thursday for Unilever products were greeted with the same message: "Sorry, this product is currently not available." Though the companies said they had solved the pricing dispute, the goods were not yet back on the website as of Thursday evening.

Distinctly British

But it was Marmite, a distinctly British product, that seized the public imagination. The spread, made from concentrated brewer's yeast, has become entwined in the national psyche since it was first produced in Burton-on-Trent, England, in 1902. Unilever acquired the brand in 2000.

People could grasp the idea that this breakfast staple might suddenly become very expensive. In a discussion that has centered on national growth rates, inflation and currency fluctuations, Marmite could be understood by all.

And the public noticed. The very entrepreneurial put their yellow and green jars of Marmite on eBay. One seller offered a used jar for 4 million pounds, plus postage, with the description "But there's still some left. Otherwise good condition."