Brands join Typhoo and Unilever in battle over prices caused by 18% drop in value of pound against dollar since Brexit vote

Birds Eye fish fingers and Walkers crisps are asking supermarkets for price rises of up to 12%, in the latest standoff between household brands and retailers over the dramatic fall in the value of the pound.

The brands have joined Typhoo and Unilever, the owner of Marmite, and a number of smaller suppliers in an industry-wide battle over price increases caused by the 14.5% drop in the value of the pound against the euro and 18% against the dollar since the UK voted to leave the European Union.

Birds Eye, which is owned by New-York-listed Nomad Foods, is seeking price rises of as much as 12% as it said many of its raw materials were priced in dollars and so its sterling costs had risen.

Birds Eye is said to be threatening to shrink pack sizes on some products to help offset cost increases, cutting the number of fish fingers in a packet, for example, from 12 to 10 or from 20 to 18.

Wayne Hudson, Birds Eye’s UK and Ireland managing director, said: “Increasing costs is not a decision we take lightly, and the last time it was necessary to raise costs was in 2012. As such, we have been in open and collaborative conversations with the retailers for some time now and are working closely with them to minimise any impact on our customers.”

He said Birds Eye’s costs had risen by an average of 5%. Some product costs increased by more than that, requiring the company to push for a double figure price increase in some cases. The company said it was aiming to absorb a significant proportion of the raw material cost inflation itself.

“Our first priority is always to the people who buy our brands and we are committed to ensuring they get the best quality products that provide value for money.”

Leicester-based Walkers, which is owned by PepsiCo, the US conglomerate that also makes Tropicana orange juice, Quaker Oats and Doritos chips, is understood to be seeking price rises of between 5% and 10%, taking a 32g bag of crisps from 50p to 55p.

A Walkers spokesperson said: “Whilst our potatoes are British, we import a number of different ingredients and materials to produce a finished packet of Walkers crisps such as seasonings, oil for frying and key raw materials used in our packaging film.

“Fluctuating foreign exchange rates, supply pressure on key ingredients and the weakened value of the pound are impacting the import cost of some of our materials and affecting the price of material costs based on commodities that are traded in foreign currencies.”

Supermarket sources said both companies had kicked off talks shortly after Unilever began discussions with grocers.

But several sources said Birds Eye’s position was not as strong as Unilever’s because shoppers were more prepared to switch to supermarkets’ own label fish fingers and other frozen foods.

Tesco runs short on Marmite and household brands in price row with Unilever Read more

One added: “I think Birds Eye has been a bit ‘toppy’ in what it’s asking for.”

James Russell, wholesale managing director at AF Blakemore, which runs a string of Spar stores, told the trade publication Retail Newsagent it was a “massively opportunistic” move by PepsiCo: “It impacts the offer we can make for our customers. We have to pass the cost on to them.

“We’ve been told if we don’t accept the terms it won’t supply us. The value message is becoming distorted.”

Marmite became the unlikely symbol of the fight over who would pick up the tab for rising costs after Tesco ran low on stocks, a situation dubbed Marmageddon, after Unilever halted deliveries as talks between the two businesses got tough.

The smaller supermarket chain Morrisons then fuelled fears about food price hikes by increasing the shelf price of the very British toast-topper by 12.5%. Manufacturers’ costs are rising as they are forced to pay more to import goods, ingredients and packaging, and they are trying to pass some of that on to their retail clients.