Food Companies at Risk of Collapse – Impact on Wholesaler Market

It’s no secret that the number of food companies at risk of collapse has gone up over the last few months. Indeed, Begbies Traynor, insolvency specialists have reported that the number of food companies at risk of insolvency has risen from 2,878 in 2013 to 4,550  in 2014.

This is largely due to the pressures put on them by the supermarkets as the supermarkets in turn face competition from the discounters. Thus, it is inevitable that some will not survive, and this is happening all too swiftly in today’s very competitive market.

What kind of affect can this have on the wholesale and foodservice market? Well, for a start the foodservice and wholesalers are buying their fruit, vegetable and dairy product supplies from the farmers and food suppliers who are receiving less and less revenue from the supermarkets. Without covering their costs, their will in turn collapse and with it, all the other businesses who they supply will be affected.

This means that with fewer suppliers, supply is reduced and the prices of the products will go up, affecting the wholesalers and the end customers too.

Additionally, with the collapse of many suppliers, the wholesalers will need to find alternative sources quickly and hence may need to go abroad to secure the right prices or look at more expensive alternatives at home. This may have an impact on the quality of the produce and the cost too. It’s a balancing act that needs to be correctly addressed as there is a knock on effect for all.

Wholesalers and food service distributors should have contingency plans in case this does happen, to ensure that their own service to the customer is not affected. We hope as many food suppliers as possible are able to survive, with the help of Government grants as the problem is not just for them, but the whole grocery industry as a whole.