Headlines in the business pages said it all – “Supermarket price-cutting means more food firms fail”.
The round of frenzied cost-cutting among UK supermarkets has caused a sharp rise in insolvency among food producers. With the big four supermarkets, trying to emulate the success of the smaller discount chains, more and more food suppliers are feeling the strain.
Supermarket buyers are often offered bonuses for securing cash contributions – such as those paid for prominent placings in stores – from suppliers, which can put additional strain on producers.
“Supplier contributions cause major cash-flow problems for food producers and can tip them into insolvency,” according to Duncan Swift, of accountancy firm Moore Stephens. “ It’s a raw deal for the food producers who need supermarkets to reach the public, but who can’t afford the terms of business that the supermarkets foist on them.”
