Rising costs and stagnant sales are getting the better of 56 of the fresh produce industry’s leading 1,000 companies, according to Plimsoll Publishing.

The Middlesbrough-based publisher’s latest analysis suggests the future of these companies as independents is in jeopardy, but for the right buyers, the businesses are extremely attractive acquisition prospects. In fact, some will be forced to seek an exit from the trade through sell-off.

"Any company that is not increasing sales is always going to struggle as rising costs restrict margins," said David Pattison, Plimsoll’s senior analyst. "For these 56 companies selling up would represent a viable solution to their problems. By absorbing costs and eliminating inefficiencies, new owners could turn these struggling companies around."

Plimsoll Portfolio Analysis - Fresh Produce also identifies 103 companies as aggressively chasing market share. "Each has the cash resources and the motive to capitalise on the failures of the 56 exposed companies," said Pattison. "It’s a win-win situation. Potential acquirers should be rubbing their hands together at the chance of buying one of these companies. First, it is likely that any one of them could be bought cheaply. Second, acquiring companies can expect high returns. By reducing costs new owners will be able to add the extra sales to their gross margin."

Pattison also outlines three vital areas in cutting costs and turning newly acquired businesses around. "Total salaries at the exposed companies make up eight per cent of sales on average and this must reduce to six per cent or less," said Pattison. "Retained employees need to be considerably more productive and sales per employee figures must be driven up from £58,329 to £180,173. Interest payments are also a big opportunity to reduce costs and new owners will have the chance to refinance the company." Agressor companies have interest payments on average of one per cent of sales compared to the industry standard of 14 per cent and a massive 24 per cent at exposed companies.

Readers can order a copy of the 1,280-page analysis at a five per cent discount by calling Plimsoll on 01642 626400 and mentioning freshinfo on ordering.