Unilever is negative on consumer emotions of China and Europe

November 01, 2022: -On Thursday, Unilever assessed consumer emotions in Europe and China, two of its important markets, but increased its full-year sales forecast as it released prices to counter increasing costs.

Like the remaining consumer goods industry, Unilever’s shows have been squeezed from the start of the war in Ukraine, pushing up energy costs and critical ingredients. As a result, the company has increased prices sharply.

“We are surprised how nicely volumes have held up [given] the levels of price increases we’ve been forced to take,” CEO Alan Jope told CNBC after the results were published. “It’s a testament to our brands’ strength and execution.”

Shoppers worldwide paid 12.5% more for Unilever products in the quarter, a record price hike for the company, with sales volumes declining 1.6%. The company reported a better surge in third-quarter sales.

Shares increased almost 1% in morning trade.

“Consumer sentiment in Europe is at an all-time low,” Chief Financial Officer Graeme Pitkethly stated to the reporters, which warns of fears of a “confluence of events” in Europe with prices and inflation increasing and consumers’ savings waning.

“Both the premium and value segments of the market are growing quite quickly, at an equivalent rate,” Pitkethly added to the journalists.

But inflation and the trust of austerity in some countries have prompted a cost-of-living crisis pushing a few people towards cheaper alternative products, like private label goods made by retailers.

“The basic needs of our European consumers occupy a higher share of wallets such as utilities, transportation, and food, and there tends to be cutting back on discretionary non-food items.”

Unilever creates over 400 brands, from Persil detergent to Ben & Jerry’s ice cream. In China, Unilever’s third biggest market doubling down on Covid-19 lockdowns, sales grew by 1%.

“The China number, 1%, was a competitive performance in a Chinese market that is quite subdued by keeping lockdowns in China,” Pitkethly added, which adds that confidence in China is less relative to historical norms. Unilever was not to increase prices in the country.