Unilever CEO Alan Jope photographed on the World Economic Forum in May 2022.
Hollie Adams | Bloomberg | Getty Images
The CEO of client items big Unilever mentioned Tuesday that costs would doubtless proceed to rise within the close to time period, including that his agency had a playbook for prime inflation due to its business dealings in markets like Argentina and Turkey.
Speaking to CNBC’s Joumanna Bercetche on the World Economic Forum in Davos, Switzerland, Alan Jope talked about how his agency was managing its operations within the present local weather.
“For the last 18 months we’ve seen extraordinary input cost pressure … it runs across petrochemical derived products, agricultural derived products, energy, transport, logistics,” he mentioned.
“It’s been feeding through for quite some time now and we’ve been accelerating the rate of price increases that we’ve had to put into the market,” he added.
“So far, the consumer response in terms of volume softness has been very muted, the consumer has been very resilient,” Jope mentioned.
“We do see the prospect of higher volume elasticity as winter energy costs hit, as households’ savings levels come down and that buffer goes away and as prices continue to rise,” he mentioned.
Last October, Unilever printed its third-quarter outcomes for 2022, with the agency reporting value progress of 12.5%.
Jope was requested if he foresaw any moderation when it got here to inflationary pressures. “It’s very hard to predict the future of commodity markets,” he replied.
“Even if you press the oil major CEOs, they’ll be a little cagey on giving an outlook on energy prices.”
Unilever’s view, he mentioned, was that “we know for sure there’s more inflationary pressure coming through in our input costs.”
“We might be, at the moment, around peak inflation, but probably not peak prices,” he went on to state.
“There’s further pricing to come through, but the rate of price increases is probably peaking around now.”
Unilever has a worldwide footprint and owns manufacturers together with Ben & Jerry’s, Magnum and Wall’s.
During his interview with CNBC, Jope touched upon the worldwide dimension of his business and the way the expertise of working in a spread of markets was steering it by means of the present local weather.
“Nobody running a business at the moment has really lived through global inflation, it’s a long time since we’ve had global inflation,” he mentioned.
“But we’re used to high levels of inflation from doing business in places like Argentina, or Turkey, or parts of Southeast Asia,” he added.
“So we do have a playbook, and the playbook is that it’s important to protect the shape of the P&L by landing price.”
“And so it’s not that we’ve taken more price, we just started acting earlier than many of our peers, and the guidance that we’ve been getting from our investors is they support that and feel that that’s an appropriate action.”
This, Jope defined, was “something we have learned from being in these high inflationary markets, though … much of that inflation is currency weakness, historically.”
“But now those markets are having to deal with the combination of commodity pressure and currency weakness. So our instinct is to act quickly when costs start coming through.”