Unilever increased the prices of its products by 11.2% in the second quarter of 2022, in a bid to mitigate growing cost of materials caused by the Covid-19 pandemic.
The British consumer goods company, which relies on commodities such as palm oil and kerosene, said net material inflation for the year will remain high at around €4.6bn.
This “strong pricing” on its products meant overall sales volumes were impacted, with underlying sales growth rising by 8.1% to €29.6bn for the company’s half year results.
The owner of Tatcha and Dermalogica, as a result of the price hike, has updated its full year guidance to be above the previously predicted range of 4.5% to 6.5%.
The company is also making further investments into its advertising to remain present in the eyes of loyal consumers.
“Unilever has delivered a first-half performance which builds on our momentum of 2021, despite the challenges of high inflation and slower global growth,” said Unilever CEO Alan Jope.
“Underlying sales growth of 8.1% was driven by strong pricing to mitigate input cost inflation, which, as expected, had some impact on volume.”
Beauty and personal care grew by 7.5%, up from the 3.3% in 2021, and was led by a 9% rise from the increased product prices and offset by a 1.3% decrease in sales volumes.
The category's success was also driven by strong growth in the company’s prestige beauty category, with turnover reaching €6.4bn in the second quarter.
Health and wellbeing, Unilever’s vitamins, minerals and supplements business, contributed to the strong results.
This was led by sales from wellness company Liquid IV, which was acquired by Unilever in 2020.
Skin cleansing also returned to growth during the period, with Dove driving sales through the launch of premium products for the category in North America.
The increase in product costs, however, was more pronounced in the company’s home care division, which took the highest pricing action and saw sales growth of 10.7%.
“The challenges of inflation persist and the global macroeconomic outlook is uncertain, but we remain intensely focused on operational excellence and delivery in 2022 and beyond,” added Jope.
