The managing director of large-scale importer Eurodix sounded a note of caution to the industry as the company entered administration.
The Peterborough-based citrus and top-fruit importer entered administration on Monday ahead of liquidation.
Mark Phillips of Sonny Cohen firm Pitman Cohen Recoveries is currently trading the business in an attempt to find a buyer. Several potential buyers have already expressed interest.
MD John Hawdon told FPJ that the place in the market for the middleman was getting tighter with supermarkets’ direct sourcing a key factor.
Eurodix, which supplies Morrisons, The Co-operative, Aldi, Budgens and Spar, employs more than 70 people from its base in Woodston.
The business is to finish all of its commitments to customers and Howdon, who will retire, is working with staff to find new employment.
In its last accounts filed to Companies House, Eurodix recorded a pre-tax loss of £533,486 in the year to 31 December 2009. Turnover at the business fell from £40 million in 2008 to £24m the following year as the business deliberately reduced costs.
Hawdon said a number of factors had contributed to the demise of the 40-year-old business, which finished dealing with Tesco three years ago.
“The problem is there’s a lot of lip service being paid to the supermarkets and people are not standing up and being honest with them,” he said.
“The message with direct sourcing has not got across in a dialogue that people understand. If middlemen are just reduced to offering services then there is not the business or the volume to go around. Also, without the expertise in sourcing then I seriously believe we will reach a point where we see certain products lacking availability on shelf in store.”
Hawdon predicted that large-scale Morrisons supplier Global Pacific, which is already working towards a direct sourcing model with the supermarket, would become wholly-owned in the style of Asda’s International Produce Ltd “within the next two years” as CEO Dalton Phillips looks for vertical integration.
“When 40 per cent of consumption is on promotion, the price of that product has been permanently devalued,” he added.
Over the next two and a half years, the major multiples are set to grow 16 per cent in square footage terms, something Hawdon described as unsustainable in the current market.
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