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Martyn Fisher

BY MARTYN FISHER

Price war 'trebles number of producers going bust'

A survey by accountancy firm Moore Stephens said 162 food production companies fell into insolvency last year

Price war 'trebles number of producers going bust'

Competition from Lidl and Aldi has led to an escalating price war, which is harming food producers

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The number of food producers that have gone bust have tripled over the past five years as a result of the supermarket price wars, a new report has claimed.

A survey by 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 the big four cutting their prices in a bid to stay competitive.

A spokesperson for Moore Stephens said food suppliers are "bearing the brunt of the ongoing supermarket price war as their profit margins are squeezed by big supermarket chains trying to offer consumers the lowest prices possible while maintaining their own profit margins."

Duncan Swift, partner and head of food advisory at Moore Stephens, added: "With the likes of Aldi and Lidl announcing further plans for expansion, competition between budget and traditional supermarkets is only going to heat up.

"The extreme buying and retail pricing strategies of big retailers mean smaller food producers are struggling to stay afloat.

"Food supplier insolvencies are still rising as small producers continue to be the major casualties in the supermarket price war."

Swift said that with over 70 per cent of UK food suppliers' produce "going across the buying desks of the UK's top 10 supermarkets, the buyer power of supermarkets remains enormous."

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