Nearly half the UK’s top fresh produce companies are nervous over what 2005 may hold, claim Plimsoll.
A survey by the analysts has shown that the top 1,000 companies in the sector are in one of four different moods based on their current financial strength. Around 42 per cent are set to enter the New Year with caution.
David Pattison, senior analyst with Plimsoll Publishing, said: “There is evidence that these concerns are justified, with 46 per cent of this year’s entrants suffering a fall in profit since last year’s study.
“This supports the fact that margins are coming under increasing competitive pressure. With current market growth at five per cent and next year’s forecast growth of two per cent, perhaps a cautious approach is right.”
While 42 per cent are cautious, the study revealed 23 per cent of the sector was feeling upbeat, with many of the companies having increased sales during 2004 by 14.2 per cent.
Other moods in the industry include the gung ho attitude with 14 per cent of the companies falling into that category.
Pattison said: “They appear determined to press on with their aggressive pursuit of market share. Most are selling at a loss, a trend currently popular in the industry. Can they maintain this risky strategy?”
The remainder of the sector, 21 per cent, say they will feel under pressure in 2005, with the market more competitive than ever.
Most of these companies are selling at a loss and still reporting falling sales, some by as much as 13 per cent.