Ailing fresh produce businesses need to “groom themselves for sale” to retain what value is left in their firms ahead of a wave of acquisitions, according to an industry analyst.
Accountants at Grant Thornton believe that a predicted rise in interest rates could kill off some failing businesses and only tactical nous can steer those companies from harm.
Grant Thornton director of agriculture Gary Markham told freshinfo that the disparity between the top and bottom produce businesses may continue to widen, despite the worst of the UK recession seemingly being over.
Markham said there are “huge opportunities” for businesses in reasonable shape to grow into a good position. He added that current low interest rates are masking the performance of ailing businesses ripe for acquisition.
Reacting to a report published by Plimsoll last week, which revealed that 366 of the top 984 companies in the trade are growing at a rate of more than 10 per cent a year, Markham said there has been a “huge divergence in profitability”, with flexible companies doing well, but “many businesses in produce very unsustainable”.
He said: “Collaboration is key, especially on areas such as waste management and profitability, which can really save time and money.”
Food and agriculture senior manager Ashley Clarkson added that re-routing sourcing to eastern Europe and increasing focus on that region could offer rewards for the produce trade.
He said: “Food companies are increasingly looking at supply chain logistics and in a low-cost environment such as eastern Europe, where labour can be sourced cheaply, it is an option, despite the work that needs to be done.”
Markham added: “The debate over food miles has become about carbon and water footprints, so actually in South America and eastern Europe where the climate and the land is right, it doesn’t matter as much about the distance produce is travelling.”
No comments yet