In the short term this will result in a huge amount of pain and disruption, with many losing their jobs, but in the medium-term it could help those who ‘survive’ to rebalance pricing dynamics. “There’s a sort of natural selection process going on. This dismal trend is also a result of oversupply, Rice noted, nodding to the recent run of administration and rescues seen in the plant-based segment specifically. There’s a degree of who can hold on long enough.”Īnd although smaller businesses may be the first to encounter problems, they’re not alone in this struggle, with Kroll’s managing director, Ben Wiles, predicting that we’ll likely see some better-known names suffering in the coming months. They have probably got other options they can go to. “You’ve had interruptions – shutdowns because of Brexit and Covid all that drains any capacity balance sheet, and you aren’t big enough to be strategic to your customers. If you were in that situation three years ago, during an inflationary environment now, you’re ‘loss making’. “Produce margins, in particular fresh, have been run razor thin for years. “As you always see in any downturn, smaller businesses or those with the thinnest margins are going to unfortunately face financial stress and difficulty first,” added Michael Rice, partner at specialist investor for the food sector, ISARA. More recent insights from Kroll has revealed a gloomy picture for food and drink businesses in the UK, with the number entering administration more than doubling in the first half of 2023 compared to same period last year.įrom the hangover of Covid, to dramatic rises in raw material costs, energy bills and wages, it’s been a tricky few years.Īs Lily Patrick, operations director for income strategy business Stratagem, told Food Manufacture: “It's just a big domino effect of the current crisis we're in.” Government figures showed that across all industries, there were a rise of insolvencies in the four quarters ending Q3 2022, compared to the period ending Q3 2021. This has set about a catalyst for change, in which businesses have had to rethink their strategies in light of ever-changing circumstances, and it’s also resulted in a period of consolidation. It’s a challenging time for industry that has comprised a multi-year period of shocks that have struck one after the other. Emulsifiers, stabilisers, hydrocolloids.Chocolate and confectionery ingredients.Carbohydrates and fibres (sugar, starches).
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