The price war is seems to be finally taking its toll, according to accountancy firm Moore Stephens, and putting companies out of business.
It isn’t just the supermarkets who are lowering prices and maximising their profits, but on the food producers who sell to them also.
The accountancy firm said that the squeeze retailers are putting on producers so as to cut prices are responsible for the sharp rise in the amount of suppliers who have become insolvent recently.
This year, a reported 146 food producers have gone out of business, whereas last year 114 had.
The British Retail Consortium countered this by saying to blame the rise in food producer insolvencies on the price war was “too simplistic.”
But Duncan Swift of Moore Stephens said, “The supermarkets are going through the bloodiest price war in nearly two decades and are using food producers as cannon fodder.
“Supermarkets have engaged in questionable buying practices for years,” he went on, “but it’s getting worse and clearly wreaking havoc on the UK food production sector.”
Food producers can be trapped and rarely complain about the buying practices of the big retailers, because they depend on giants like Tesco and Asda for their business. This can lead to there being no checks on aggressive buying practices, according to Mr Swift.
The big shake up of the superstore industry is benefiting customers hugely, and is the first time in a long while that people can enjoy lower prices, but the benefits to us ultimately cause problems elsewhere.
Instead of coming out of the pockets of the supermarkets, which have over built and expanded beyond their means over the last decade, the full effects are being felt by food producers who relied on the big stores for their survival.
