Unilever just announced price hikes. Again.
The reason this time? The war in Iran. Fair enough - their costs just jumped by up to €900 million. Nobody planned for that.
But here's what's not being said out loud:
This is the third cycle in four years.
2022–2023: Unilever raises prices aggressively after Covid commodity shock. Consumers defect to private label.
2024–2025: Unilever spends billions on marketing to win those shoppers back. By Q1 2026, they hit volume-led growth. It looked like a turnaround.
May 2026: CFO announces "frequent price increases, in small doses." Loop resets.
And Unilever isn't alone. Nestlé. P&G. Reckitt. 36 companies - in a single week - have signalled price hikes due to the Iran conflict.
Meanwhile, private label sits at 50% market share in European grocery. Over half of consumers now actively prefer private labels over national brands.
I saw this play out firsthand. When A-brands started pushing the price hikes, our buying team stopped asking how to absorb the costs and started asking if we even needed the brands.
Often, we didn't. The margins vanished, consumers wouldn't pay the new shelf prices, and our private label was already good enough. Buyers across Europe are quietly cutting A-brands again right now.
So what should FMCG brands do differently this cycle?
1. Every hike trains your consumer to evaluate utility. After the third cycle, switching to a store brand is pure muscle memory. Brands need to build actual switching costs through undeniable product performance, not just hope shoppers tolerate the premium.
2. Hiding hikes by shrinking trial sizes or playing games with pack weights works on a spreadsheet, but shoppers are hyper-sensitized to it. It actively erodes trust. If you have to raise the price, the product needs to justify the cost at the shelf. Protect the anchor SKU at all costs.
3. In an inflation shock, shoppers look at price tags and performance, not abstract corporate goodwill. Stop banking on emotional marketing campaigns to cover price gaps. You can't pay for groceries with brand loyalty.
4. Innovate your way out - don't price your way through. L'Oréal beat all expectations this quarter while its peers warned of margin pressure. Why? Because premium beauty grew - consumers choose to trade up when a product delivers something private label cannot replicate in 18 months.
The supply chain shock is a crisis nobody predicted.
But the private label crisis has been building for years. Every price hike cycle accelerates it.
The question for FMCG directors right now isn't "how much do we raise prices?"
It's: "How many more cycles will our product superiority carry us?"
Especially curious from people on the buying side or inside these brands right now.