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Suppliers sunk by food price wars

Tumbling prices caused by supermarket price wars were responsible for a huge spike in the number of food suppliers going out of business last year.

The number of producers entering insolvency hit 162 in 2015, more than triple the number recorded in 2010 and an increase of 11% on 2014 levels, according to research by accountancy firm Moore Stephens.

Suppliers bore the brunt of aggressive downward pressure on prices from retailers, said Moore Stephens. In particular, the response of the big four supermarkets to the threat posed by Aldi and Lidl had resulted in producer margins being squeezed as the likes of Tesco and Asda competed to offer their customers the lowest prices.

“The extreme buying and retail pricing strategies of big retailers mean smaller food producers are struggling to stay afloat,” said Duncan Swift, partner and head of food advisory at Moore Stephens.

“Food supplier insolvencies are still rising as small producers continue to be the major casualties in the supermarket price war.”