Unilever Raises Prices 2.3% as Higher Costs Meet Slower Volume Growth

Unilever’s latest sales figures show the trade-off behind its response to rising costs: prices rose, but volume growth slowed. The consumer goods group increased prices by 2.3 per cent in the third quarter as higher commodity costs fed through to ingredients and shipping. At the same time, volume growth eased from 5.5 per cent to 2.9 per cent.

Chief executive Fernando Fernandez described the quarter as another period of competitive growth, pointing to continued volume delivery and higher prices to offset commodity costs. The figures suggest the price increases supported sales growth, though the slowdown in volumes shows that higher prices did not come without a change in purchasing patterns. The source does not specify how much of the volume decline came from consumers buying less, switching products or other factors.

That distinction matters across a business that sells everyday products in several categories and markets. Price increases can help protect revenue when inputs become more expensive, but the balance between price and volume offers a clearer view of how customers are responding. Unilever’s results diverged sharply by category and geography, so the group’s aggregate figures mask both stronger areas and persistent weaknesses.

Home care and personal care lead

Home care sales rose by 9 per cent, the strongest growth among the business areas described. Beauty and wellbeing grew by 5.7 per cent, while personal care increased by 6.3 per cent. These divisions include brands such as Dove, Tresemmé and Vaseline, and align with Unilever’s stated plan to concentrate more heavily on health and beauty products.

The group expects underlying sales growth in the second half of the year to be about 5 per cent. That is an improvement on its previous guidance range of 4 to 5 per cent. The revised expectation signals a more positive view of near-term performance, but it sits alongside a slower third-quarter volume pace and substantial differences between divisions. The figures provided do not break out how much of the expected growth is tied to pricing or volume.

For investors and suppliers assessing the company’s progress, the mix will be as important as the headline. Growth led by home care and personal care gives Unilever support in categories that are performing well. Whether that momentum can balance weaker food sales and developed-market results remains an open question in the figures available.

Food remains the clearest drag

Food sales grew by just 0.1 per cent in the quarter, reaching $3.1bn. That marked a slowdown from 1.2 per cent growth in the first half, when food was already the group’s weakest performer. The category includes Marmite, Hellmann’s and Bovril, and is due to be sold to US company McCormick under a $45bn deal agreed in March.

Unilever says the sale is making “strong progress” and is expected to complete in the middle of next year. Until then, food remains part of the group’s reported performance. The weak quarter is therefore relevant both to the business’s current growth profile and to its planned shift toward health and beauty. The source gives no further detail on the transaction’s terms beyond its value and expected timing.

The company highlighted challenges in the US foods market, where competition in condiments has increased. It is responding with targeted price cuts intended to support sales of those products. That approach points to a different pricing problem from the one elsewhere in the group: while higher input costs have prompted price rises in the wider business, competition is leading to cuts in selected food products. The source does not quantify the effect of those reductions on sales or margins.

Regional results pull in opposite directions

Developed markets recorded a 0.9 per cent sales decline, including a 1.7 per cent fall in Europe. Unilever attributed the weakness to a “soft market environment.” Emerging markets, by contrast, delivered 9.5 per cent underlying sales growth, with double-digit growth in India, Turkey, Vietnam and Pakistan. Across those markets, volumes increased by 6 per cent and prices rose by 3.3 per cent.

The emerging-market figures stand out because growth there came from both higher volumes and higher prices. In the third quarter as a whole, volume growth slowed even as the group lifted prices. But the regional breakdown shows that this pattern was not uniform: emerging markets combined volume gains with price increases, while developed markets contracted. Unilever’s performance therefore depends on where its products are sold as well as which categories are growing.

Analysts at RBC Capital Markets called the quarter “decent,” citing stronger emerging-market and home care sales as more than offsetting weak growth in developed markets and food. They also said Unilever and its shareholders still own a food business that is weighing on group performance. That assessment captures the tension in the results: several divisions and emerging markets are growing strongly, but those gains coexist with near-flat food sales and declines in developed markets.

The next points to watch in the company’s own figures are whether its second-half growth expectation is met, how volume trends develop alongside pricing, and whether food and developed markets improve before the planned sale completes. For now, Unilever’s growth is being carried by home care and emerging markets while food remains a material drag.