The past year has seen a dramatic rise in insolvencies among UK food and drink manufacturers.
- Insolvency numbers surged by 108% for food and drink companies, according to Inverto.
- The increase breaks down into a 102% rise for food manufacturers, and 123% for drink manufacturers.
- Cost inflation and ingredient price hikes, driven by the Ukraine conflict, are key contributing factors.
- Supermarkets have started reducing prices, offering potential relief for manufacturers.
The number of food and drink companies facing insolvency in the UK has increased significantly, marking a 108% rise over the past year, as highlighted by management consultancy group, Inverto.
Breaking down the figures, the insolvency rate for food manufacturers rose by 102%, while drink manufacturers experienced a sharper increase of 123%. These figures underline the substantial financial difficulties faced by these sectors.
Key factors influencing this trend include the soaring costs of supplies and ingredients, notably exacerbated by the ongoing war in Ukraine. Such financial pressures have rendered many companies unable to meet their debt obligations.
However, there is a potential silver lining as Inverto’s managing director, Mohamad Kaivan, indicates that as market prices begin to drop, food and drink manufacturers may find opportunities to renegotiate and reduce their supply costs.
This trend is reflected in recent actions by supermarkets, including price reductions on essential products by several major retailers. Asda and Aldi have announced cuts across various fruit and vegetables, Morrisons has reduced select meat prices, and Sainsbury’s has extended discounted pricing to meat, fish, and poultry. These reductions may provide some relief to struggling manufacturers by alleviating cost pressures.
The recent insolvencies highlight significant financial challenges, although falling prices may offer a chance for recovery.
