Marmitegate: I cannot see why Unilever must sell to Tesco

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Marmitegate: I cannot see why Unilever must sell to Tesco
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I may be missing something but I cannot for the life of me begin to see why Unilever (LON:ULVR) must sell to Tesco (LON:TSCO) at a price determined by Tesco. (It is true that my household is dedicated to Tesco and that we have circa six large pots of Marmite and can ride out the storm. But even when this dramatic phase of wise-virgindom in British social life is over I still cannot see why Unilever must sell to Tesco.)

As for the accompanying absence of the likes of Dove shampoo and Flora margarine, most right-minded people will celebrate.

Unilever thinks it can get away with this price hike because of inflation. I am sure they are right. They must simply judge whether the British market will stand it. Which it will as to most if not all of the rise. It’s a moment to savour a savoury taste.


Be it noted that all this inflation will lead to a colossal rise in HM Treasury’s taxation revenues – the increased profits through inflation will be illusory but taxable. We have been here before – in 1975. It made the then Chancellor, Denis Healey, look silly – not difficult of course but undeniably true. His problem was the assembly of morons that constituted Labour’s backbenches would not tolerate a reduction in top rates of tax. So Healey had to introduce a scheme of tax relief that was so difficult to understand that it got past the morons. In the end the relief schemes had to be cancelled – at which point the tax that HM Treasury imagined it would collect had skipped away.

HM Treasury is also aware that HM Government’s liability to pay out on the gilts market is in effect being reduced on a heroic scale. Heroic here means comfortably in excess of HMG’s annual deficit where the deficit is defined as the excess of HMG’s annual expenditure over taxation revenues. This result is inevitable.


Perhaps this is the moment when forward-thinking finance directors will run out and get loaded up with debt. Incurring debt which never has to be repaid has its attractions. The money can perhaps be deployed by going long Marmite. Or, should one be less romantic, Unilever.

This decline in sterling is of course why Churchill Mining (LON:CHL) has risen 15% – the award, if it comes, will be in US dollars.

And Scholium (LON:SCHO) has warned this morning but pointed out that a significant chunk of its trading stock is to be sold abroad on much enhanced (in sterling) terms. What SCHO omitted to mention is that wise Brits will turn their cash into rare books. And quick.

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