A new report from Plimsoll Publishing has found that 740 companies in the UK fresh produce industry would make more profit if they were taken over.

Latest research from the market analyst shows that a staggering

£387 million worth of profit is squandered each year in the fresh produce industry.

The report found that 19 per cent of companies are making a loss, eight per cent are losing money for the second year running and seven per cent of companies made less than a three per cent return on investment. The findings suggest that 740 of the 1,000 companies covered would make more profit under new ownership, resulting in £387m extra revenue in the industry as a whole. Plimsoll warns that this money is being thrown away because of companies’ failure to control their losses and manage their businesses more effectively.

“These results prove just why the fresh produce industry is currently hot with takeover talk and speculation about future ownership,” said David Pattison, senior analyst on the project. “It’s certainly no surprise that trade buyers and private financiers are taking a close look at the industry - some of these fresh produce businesses have huge potential that is not being realised at the moment. We’ve heard a lot about private equity firms recently, and this is one industry where they could reap rich rewards.”

But Duncan Swift, joint head of food at Grant Thornton UK, said that the Plimsoll report is misleading.

“It is disingenuous to suggest that inefficiencies in the sector are the same as wasting £387m worth of profit, and that management could make this better.

“The major fresh produce businesses are technically efficient but are losing profitability because of their weak negotiating power with the supermarkets.”

Swift added that what is happening across the entire sector is that larger players are seeking to expand and take over the weaker and smaller companies in order to achieve economies of scale.

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