Why the Tesco v Unilever feud was good for British business
A view from Helen Edwards

Why the Tesco v Unilever feud was good for British business

The dispute between Tesco and Unilever disproves the perception of British business as 'too lazy and too fat' and highlights its risk and complexity.

Dr Liam Fox, secretary of state for international trade, who has never run a business, nor worked in one, declared in September at a Conservative event that British business is "too lazy and too fat". He went on to observe that our businessmen prefer to "play golf on a Friday afternoon" than seek to boost the country’s prosperity.

In Fox’s 1950s imagination, the recent tussle between Tesco and Unilever over the latter’s proposed wholesale price increases would have played out very differently. On a well-watered course, somewhere midway through the back nine, a quiet conversation would have taken place between a senior Tesco buyer and his Unilever trade-negotiator guest.

"Look, old boy, there’s a few raised eyebrows about that price rise you’re after. Some of the chaps think 10% is getting a bit strong."

"We’re in a bind, though. Brexit’s killing us. Look, it’s not as if we’re going to splash a bloody great ‘10% ON!’ price sticker across the packs. The other supermarkets will follow you… and, well, you’ll make your margin on the new price. Can’t we both do well out of this?"

"Leave it with me. No promises, but let me see what I can do."

Sleazy, indolent, colluding – but wide of the mark. In the event, these two corporate heavyweights – one British, the other Anglo-Dutch – met not on the golf course but in the ring, which is no place for the flabby and unprepared.

Tesco – always a street fighter by instinct – looked the leaner and sharper of the two. In threatening to delist some of Unilever’s most popular brands, from Marmite to Ben & Jerry’s, it had a great deal to lose, and knew as much. On the other hand, it had its new corporate purpose to live up to: "Serving Britain’s shoppers a little better every day."

Note to Fox: lazy companies would not trouble themselves with public statements of corporate purpose. It’s not that they are arduous to create – you can set one down on a Friday afternoon – but they are a nightmare to live up to. And there are always brave souls inside, and plenty of troublemakers outside, who will call you to account at the slightest slip. 

Unilever’s purpose statement is longer, embracing doughty commitments to "communities" and "the environment". It’s a hard enough one to reconcile with shareholder demands at the best of times, but tougher when you’ve got Tesco jabbing away and cutting off your room for manoeuvre.

Bigger, slower but by no means a soft target, Unilever did its best to hit back with the facts. The decision to leave the European Union had sent sterling plunging and increased the cost of imported raw materials by far more than the price rise it was proposing.

It got caught on the ropes with Marmite – made in the UK with British ingredients – but, even there, was able to point out that the manufacturing machine parts and packs are imported and must be paid for in devalued pounds.

Professionals to the last, both businesses did everything to ensure their brands came out well from the contest, smiling and winking at the crowd as they slugged it out. Tesco has certainly enhanced its reputation as a consumer champion, but even Unilever will win some credit for its readiness to compromise and get popular products back on the shelves. 

What this very public scrap was really good news for, though, was the brand you might call "British business" – a misunderstood and unloved entity if there ever was one, playing a boo-hiss role on any edition of Question Time you care to tune into.

The popular image of corporate life is shaped – misshaped, as often as not – by those who report on it and speak for it. Why should people think beyond the cliché of bloated executives downing expense-account gins at the 19th hole when our most senior politician in trade and industry evokes it for them? 

At the other extreme, you have the six million weekly audience for The Apprentice – a "factual-entertainment" programme so adrift from reality that it is to business what Bob the Builder is to architecture. 

Tesco v Unilever, though, was a rare public showing of the real thing, with all its verve, risk, hunger, complexity and combat – not just against the adversary but for the heart of the consumer. It’s a shame it couldn’t go on longer.

As for Fox, the paunchy former medical doctor may have intended his insult to galvanise British industry but succeeded only in causing outrage and disdain for his lazy caricature. Physician, heal thyself.

Liam Fox

The former civilian army medical officer has been a member of parliament since 1992.

In the 2009 expenses scandal, Fox was the shadow cabinet minister with the largest overclaim – first repaying the £22,476 owed, then appealing against the decision. The appeal was heard in the high court and rejected.

In 2011, he was forced to resign his defence secretary cabinet post after allowing a close friend to take an unofficial "advisor" role. The friend had attended meetings at the Ministry of Defence without security clearance and had enjoyed the associated privileges of meetings with foreign dignitaries – including a trip to Sri Lanka.

A leading advocate in the Leave campaign, Fox is now one of Theresa May’s "three Brexiteers" charged with negotiating the terms of Britain’s departure from the European Union.

Helen Edwards is the former PPA busi­ness columnist of the year. She has a PhD in marketing, an MBA from London Business School and is a partner at Passion­brand. 
@helenedw