A group of lean, fit and relatively small companies are taking on the fresh produce industry by upstaging some of the industry’s bigger names, according to new research.

Plimsoll Publishing’s report on industry concentration says that emerging companies are increasing sales at three times the rate of their larger competitors, and delivering four times the profitability.

According to Plimsoll, price deflation is hitting the bigger companies where it hurts - in their pockets. It started with air travel, moved to electrical goods, used cars and even insurance. And now it has arrived in the fresh produce industry.

12 of the top 100 firms are losing money, while 35 are making less profit than last year. Salaries alone at the top 100 companies eat up 10% of sales. In general they pay their staff more and are less productive.

But the new kids on the block are nimbler, slicker and more efficient. Plimsoll’s senior analyst, David Pattison, said: “12 of the bigger companies are displaying symptoms of extreme tiredness. But the big companies are desperate not to miss out on the new profit and growth areas, so they are busy hunting down the emerging firms. At Plimsoll, we have identified why this is happening, and who it is happening to.”

The fresh produce business is just the latest in a long line of industries to be affected by falling prices. The cost of used cars has fallen by an average 3.6% since 2000. Over the same period, the price of IT equipment has dropped by 20%, photographic gear by 8%, clothing by 6% and toys by 5%. At the same time, the cost of production has risen by 1.3% in one year alone, between 2005 and 2006.

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