The major supermarkets’ decision to take food manufacturing in-house could lead to a tidal wave of closures for food suppliers.
The UK food supply chain could soon face a “nightmare scenario” as the major supermarkets look into launching their own food manufacturing facilities.
That’s the belief of insolvency specialist Begbies Traynor, who claim the biggest supermarkets’ desire for even stricter cost controls could result in them taking food manufacturing in-house.
“Some are even looking into launching their own food manufacturing facilities to give them even tighter control over costs and the ability to still offer more aggressive pricing – signalling yet another nightmare scenario on the horizon for the UK food supply chain,” says Begbies Traynor partner Julie Palmer.
With already worrying research that shows more than 1,600 growers and suppliers are in ‘significant’ financial distress, could this be the final nail in the coffin for growers and food suppliers?
The latest data from Kantar Worldpanel is certainly far from comforting, showing grocery prices have plummeted 1.7% in a year. With little sign of that fall stabilising, it’s hard not to see a bleak future for businesses involved in the food supply chain as the ongoing supermarket price war – the bloodiest in nearly two decades – takes its toll.
What’s clear is that suppliers are bearing the brunt of the dramatic turnaround plans being implemented by the UK’s biggest supermarkets as they square up to aggressive discounter competition and, as a result, could face a tidal wave of closures in the not too distant future. Supermarkets launching their own food manufacturing facilities might open those floodgates for good.