The number of UK food and drink manufacturers with significant financial problems almost doubled in the last few months of 2014 as the supermarket price war affected suppliers.
Research by insolvency specialist Begbies Traynor found 1,410 business were struggling to make ends meet in the three months to the end of December, 92% more than in the same period a year before.
“The largest chains need to tread very carefully if they want to prevent a new crisis creeping through their supply chain,” said Julie Palmer, a partner at Begbies Traynor. She said suppliers’ margins were being squeezed and their payment terms lengthened as supermarkets tried to offer lower prices. She suggested UK food producers and suppliers were not benefiting from the rise of German discounters Aldi and Lidl because although most of their fresh food is bought in the UK, many of their canned and packaged products are sourced abroad.
The research echoes a report from accountancy firm Moore Stephens, which found food producers had become “cannon fodder” in the supermarket price war with 28% more going into insolvency in 2014 than in 2013.
