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Financial distress for UK’s food suppliers

July 28, 2015 | Financial Saviour

There has been an increase in the number of food suppliers in the UK that are experiencing levels of financial distress deemed to be ‘significant’, according to new research from insolvency practitioners at Begbies Traynor.

This figure has increased by 54% over the last 12 months, emanating as a result of the highly competitive food supply market as the UK’s largest and most established supermarket chains focus on upping their game in an attempt to win customers back from the German discounters.

Prices are consequently slashed all across the board and payments to suppliers are regularly delayed – two key factors that majorly contribute to the current tough nature of the food retail industry and hit the UK’s smallest food suppliers such as farmers and independent grocers the hardest. Especially when it becomes clear that these methods are not simply just here for the short-term, but here to stay.

While there are indeed cases of increasing ‘significant’ financial distress experienced by the UK’s food retailers, up 38% over the past year, 97% of these businesses struggling to make ends meet are SMEs.

Switching our attention to the UK’s food supply chain that keep the major UK stores and supermarkets stocked, we discover the highest year on year increase in ‘significant’ financial distress of all sectors monitored by the corporate recovery research with 1,052 companies rising 54% to 1,622.

This no doubt highlights the impact that the drastic turnaround strategies implemented in the food retail industry are having on those SME food suppliers that now represent just less than 90% of all struggling companies and businesses within the sector.

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