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Rise in food producers entering insolvency

3 April 2017

According to accountancy firm Moore Stephens, 146 food producers in the UK have become insolvent, compared to 114 last year. It blames the big supermarkets and the increasing competition brought on by discount shops like Aldi and Lidl as the reason behind producers being forced out of business.

With prices being slashed by the big retailers to attract customers, this is making it difficult for food producers to achieve profit and make quality produce at the same time. 

Partner at Moore Stephens, Duncan Swift, said “The supermarkets are going through the bloodiest price war in nearly two decades and are using food producers as the cannon fodder.”

“Supermarkets have engaged in questionable buying practices for years, but it’s getting worse and clearly wreaking havoc on the UK food production sector.”

The British Retail Consortium believes supermarkets shouldn’t be to blame for the decline as for a long time there has been strict regulations in place to ensure fair practices between suppliers and retailers. The body also claims supermarkets know how important is it to keep trusting and sustainable relationships to ensure produce is of the best quality for their customers. They do not want to push producers out of the market.

There are valid points on both sides of the argument, yet it is likely supermarkets do have some impact on food producers struggling to stay afloat. With any competition, there will be winners and losers and some companies will not be able to keep up with the demand and changing retail environment. 

Perhaps there also needs to be more transparency of deals between retailers and suppliers to show everything is above board.  

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