Suppliers of food and drink under pressure

MORE than 100 food and drink suppliers face going bust by the end of the year amid a squeeze caused by supermarket price wars, a report said today.

It showed the number of firms in the sector in “significant distress” rose 92 per cent to 1,410 in the final quarter of 2014.

The Red Flag Alert from corporate recovery specialists Begbies Traynor found suppliers had become the worst-hit casualties of the “brutal” competition between the UK’s big supermarket chains.

It said the retailers had been squeezing the suppliers’ profit margins and stretching payment terms in a bid to offer consumers the lowest prices.

Begbies Traynor partner Julie Palmer said: “Unless the supermarkets start treating their suppliers more fairly and find longer-term solutions to their cost-cutting exercise, we expect that more than 100 of these 1,410 ‘significantly’ distressed food and beverage suppliers will fall into administration before the year is up.

“With 3.6m people employed in the UK food supply chain, the economic and political risks associated with the current price war are reaching boiling point ahead of May’s election.”

The findings come amid the price war between major players Tesco, Sainsbury’s, Asda and Morrisons as their market share is eroded by German-owned discounters Aldi and Lidl. Official data shows food prices have been falling for six months.