Market analyst Plimsoll is predicting an “exciting” year in 2009 for the fresh produce industry, that will also feature a fall in sales growth coupled with job losses.
Plimsoll’s latest analysis of the fresh produce industry finds that more than half of the companies in the sector are already experiencing declining sales and warns that businesses need to be ready and prepared for a series of unique opportunities that will present themselves in the year ahead.
The company’s senior analyst David Pattison said: “Next year will be a very exciting year for the industry - it will be a time to choose your enemy wisely. Going on the offensive may well be the best defence. Key to this is the successful targeting of your weakened, low margin and heavily indebted competitors - their failure will be vital to your own company’s success.”
Overall sales growth in the sector is running at a little over 5.3 per cent, which is up on the previous year, but even the most bullish companies will need to rethink.
Pattison said: “The overall market will see very little growth, if any. Already over half of all UK fresh produce companies have seen a decline in sales as the impact of the wider economy moves to the sector. Where opportunities to increase sales do not materialise, this is sure to be at the expense of other, weaker players in the market. For a select group of 151 companies, 2009 could be their year. These companies, many of which are offering low-cost alternatives, could capitalise as businesses and consumers alike seek to reduce costs.”
In 2009 Pattison expects margins will again be under pressure from increased pricing competition, but warns companies should take action now to reduce their costs and accept their current level of business activity.
Another feature of the new year is likely to be that businesses will be forced to act more responsibly as banks tighten their lending policies. And Plimsoll also foresees a wave of significant retirements from the industry which could lead some firms to question their independence.
And with 30 per cent of the total market in the hands of just 15 businesses, the significance of acquisitions should not be underestimated either, he added.
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