The prices of supermarkets’ own-branded bleaches and washing up liquids are set to rise after one of the country’s leading suppliers warned that it was being hit hard by rising costs.
McBride, which supplies most British supermarkets with their private label cleaning products, had already raised prices over the summer but has now said it will have to do so again.
Bosses said that supermarkets were likely to see a “minimum of mid to high teen percentage increases”.
“Raw material and packaging costs have moved faster and to a higher level than previously expected,” the company said in an update ahead of its annual meeting yesterday.
“In addition, the shortage of haulage capacity and higher fuel costs has continued to substantially inflate distribution costs — again ahead of the board’s expectations — which show no sign of abating in the near term.”
McBride was founded by Robert McBride in Manchester in 1927 to make chemical products. Today it supplies own-label products including dishwasher tablets, surface cleaner sprays, disinfectant and bleach. It has 3,400 staff and operates in ten countries. A quarter of its sales are made in Britain.
Charles Hall, an analyst at Peel Hunt, the broker, had previously forecast McBride’s cost base would swell by £30 million in its current financial year, which runs until the end of June, “but this is now approaching £70 million”.
Given that there is always a delay in passing extra costs on to customers, McBride, which also owns the Oven Pride brand, warned that it would deliver an underlying loss of up to £10 million in its first half between July and December. It is the third time this year that McBride has warned that higher costs would put a big dent in its profits.
Analysts slashed their forecasts again as a result and that was reflected in the share price, which dropped 1½p, or 2 per cent, to 68p.
Should prices rise by too much, Hall thinks supermarkets might give up on their own brands and switch to others instead. Even if they do not, customers might look to re-tender contracts.
Amid the “unpredictability” of supply chains at the moment, bosses said that they were unable to give a better idea of how the rest of the financial year would pan out.
Clive Black, a retail analyst at Shore Capital, expects that the rise in input costs will soon be “more evidently realised on the shelf edge”.