Some of the largest companies in the fresh produce industry are failing to exploit favourable conditions in the sector to their advantage, according to the latest analysis from Plimsoll Publishing. Competitive pressures at the top end of the market mean that while the major players battle for market share, the smaller and medium-sized companies are being left alone to prosper.
"There is clear evidence of stagnation at the top of the market," said senior analyst David Pattison. "Some 71 of the top 150 companies failed to increase sales above inflation compared to 47 companies last year. With many also experiencing rising costs, their future direction now looks uncertain."
The clear indication from the report is that size does not lead to success as 17 of the leading companies did not even make a profit in 2003. "Despite their size they are less profitable than the smaller market players," said Pattison. "Only 46 of the top 100 companies have shown profit growth in three consecutive years and four companies have not made any profit over the same period."
Pattison believes that the scene is set for a clash of the titans. "I predict we might see at least three of the top 150 UK fresh produce companies having to merge or be taken over," he said. "In fact it is so likely we have put 27 on the danger list."
In parallel with the supermarket sector, where congestion occurred at the top, a series of major acquisitions might clear the air. In this scenario, smaller companies are at little risk of takeover by the bigger players as they don’t offer any strategic opportunity.
Plimsoll also points out that the boards of major companies have a large percentage of ageing directors: 24 per cent of the top 150 companies’ directors are over 60 years old. "They are well paid with average earnings of £110,000 a year. I wonder how the future performance of their companies will change once they retire?" asked Pattison.
The full 490-page analysis is available from Stockton-based Plimsoll for £500. Readers of freshinfo can claim a five per cent discount mentioning this article on ordering.
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