Supermarket price wars blamed for jump in number of food producers going under

THE number of food producers that have gone bust have tripled over the last five years as a result of the supermarket price wars, a report said.

A survey by top 10 accountancy firm Moore Stephens said 162 food production companies fell into insolvency last year, more than treble the 48 insolvencies in the sector in 2010 and 11 per cent more than just a year ago.

It blames the supermarket sector’s ongoing price war, sparked by the growth of discounters Aldi and Lidl, which has seen major players such as Tesco and Asda cut prices to protect market share.

Consumer prices have fallen in the supermarket sector for almost 18 months, according to respected consumer research body Kantar Worldpanel.

Moore Stephens said food suppliers are “bearing the brunt of the on-going supermarket ‘price war’ as their profit margins are squeezed by big supermarket chains trying to offer consumers the lowest prices possible whilst maintaining their own profit margins”.

It added that the squeeze on prices is set to continue as discounters gear up plans for expansion.

Earlier this year Aldi said it plans to open 80 new stores this year, creating 5,000 new jobs.

The German-owned supermarket runs more than 600 stores in the UK, and aims to boost this to 1,000 by 2022.