Kraft Heinz and Unilever struggled to explain why their profits have jumped in recent years, as MPs accused major brands of “gauging, greedflation and profiteering”.
In a recent tense session at the Environment, Food and Rural Affairs Committee, Barry Gardiner accused representatives from the food manufacturing companies of taking the public for “mugs” as he questioned how they could claim times had been “tough” as profits soared.
During the grilling, he complained about them failing to give direct answers, as he even revealed the committee’s clerks had been forced to ask “a number of times” to get them to attend the panel.
Gardiner said, “I want to start off by setting out what the public feel, because you’ve confected this issue… about how it’s tough out there. But the thing is, when the public looks at your companies, they know it’s been tough out there but they don’t know it’s been tough for you.”
MPs also questioned the Heinz Beans manufacturer’s UK head of supply chain Dominic Hawkins over why profit had risen by almost seven times over recent years.
Despite Hawkins insisting several times it had “passed on less input costs over the period than from before the pandemic”, the Heinz boss could not explain the figures presented in parliament and repeatedly promised to send a follow-up letter to explain.
Gardiner asked, “You’ve reported a rise in pre-tax profit of 21 per cent for the first half of 2023. But your company’s claimed that it has not been profiteering in any form from rising prices?”
Gardiner compared fellow FMCG, Arla Food – which was in attendance, represented by UK managing director Bas Padberg – whose profits had remained static throughout the same period.
He pointed out that Arla’s net margins had declined from 3 per cent to 2.8 per cent over the past three years, while Unilever’s had risen from 10.8 per cent to 12.7 per cent.
The committee suggested FMCGs owed the British public an apology, adding, “The public are suffering and they look at your companies and they think not just why aren’t these guys helping us? They think, ‘We are owed a bloody apology. You are taking us for mugs.’”
DEFRA’s fairness in the food supply chain inquiry follows a report published late last year by the Competition and Markets Authority (CMA) that accused branded suppliers of “pushing up prices more than cost increases”.
It is understood that the next phase of DEFRA’s inquiry will look at the role of supermarkets, with the leaders of the UK’s leading grocers expected to be in attendance, set to take place in the coming weeks.
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