Supermarket wars hit food suppliers hard

HEAVY discounting and delayed payments from supermarkets fighting to win back customers from the discounters is putting the UK’s smallest food suppliers, independent grocers and farmers at risk of collapse, warns Begbies Traynor.

According to Begbies Traynor’s Red Flag Alert research for this year’s second quarter, the UK food and beverage manufacturers sector, which includes many of the food suppliers and farmers that supply the major UK supermarkets, witnessed the highest year on year increase in “significant” distress of all sectors monitored by the Red Flag research.

The business recovery specialist said the tally rose 54 per cent, with 1,622 companies now struggling to make ends meet; up from 1,052 at the same stage last year.

Begbies said within this sector, 1,436 small and medium enterprise (SME) food suppliers “are bearing the brunt of supermarkets’ drastic turnaround strategies and the new savage landscape in the UK retail food industry”. It added that there was a 38 per cent increase in struggling food businesses over the last year, rising to 5,258 in the quarter, from 3,804 a year ago.

Related articles