Supermarket price war hitting smaller food suppliers hardest, survey finds

Nearly 4,700 food and drink suppliers are "in distress", a rise of 66 per cent on a year ago, while the number of smaller firms in trouble has more than doubled, according to insolvency specialist Begbies Traynor.

Image: Anthony Albright
Image: Anthony Albright

It also classed 1,400 firms as in "significant financial distress" in the first quarter of this year, nearly twice the figure for the same period last year.

Begbies Traynor partner Julie Palmer said: "Suppliers lower down the food chain are struggling to achieve a fair price for their produce. Mass price reductions have severe consequences for less established food retailers and suppliers, particularly small and medium-sized enterprises.

"Meanwhile, wastage on farms continues to be a problem as suppliers are increasingly struck by last-minute order cancellations and overzealous cosmetic specifications set by the large supermarkets when it comes to the look of food that it will accept from farmers."

The survey adds that the introduction of the Prompt Payment Code in 2008 – meant to speed up the settlement of bills to suppliers from major businesses – has had little effect. 

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