Unilever pricing: CEO says prices can only rise when brands get stronger

Unilever can only charge more than the market if its brands are getting stronger, chief executive Fernando Fernandez has told investors. Speaking on the company’s third quarter results call on 28 October, he said any price rise has to be paired with investment in brand equity or premium innovation, as Marketing Week reported.

“You can only increase pricing relative to market through the strengthening of your brand equities,” Fernandez said.

The numbers

Underlying sales grew 5.2% in the quarter, according to Unilever’s trading statement, with 2.9% from volume and 2.3% from price. Unilever said the step up in price was a response to higher commodity costs, particularly in Home Care and Personal Care. Turnover was €13.3bn, up 6.7%.

Its Power Brands grew 5.8% with 3.3% volume growth, and Dove, Vaseline, Sunsilk, Clear and K18 all grew by double digits. The split by region was stark. Emerging markets grew 9.5%, while developed markets fell 0.9%, with Europe down 1.7% in what Unilever called a soft market. Foods was flat.

Unilever upgraded its outlook and now expects at least 3% underlying volume growth for 2026, with full-year sales growth still within its 4% to 6% range. It will set out more detail at an investor event next week.

Volume first, price second

Unilever’s turnaround over the past few years has been about winning volume rather than leaning on price, as the company did in the high inflation years after the pandemic. In the second quarter, volume grew 5.5%, its best in 15 years. Price played a bigger part this time, but Fernandez said he was pleased that the business had grown both.

He called growing volume by at least 2% “absolutely fundamental”, and said Unilever would stay competitive on both pricing and marketing investment as price plays a bigger role in the near future. Chief financial officer Srinivas Phatak described the environment as uncertain, but said the strength of the brands gave the company confidence.

Why it matters

This is one of the world’s biggest advertisers saying out loud that pricing power is earned by brand building, not by the finance team. It fits WARC’s finding that consumer goods giants spend more of their sales on advertising than other big brands, and it gives UK marketers a useful line to take into budget talks as commodity costs rise.

The weak European numbers matter too. With UK shoppers already nervous, as GfK’s latest consumer confidence figures showed, brands that raise prices without a stronger story behind them risk losing volume to own label and to rivals running price promotions.