There are around 257 companies teetering on the bring of existence in the UK fresh produce trade, according to new analysis.
Plimsoll's review of the year has highlighted 257 companies in 'financial difficulty' and 439 particularly strong groups
The 2011 Plimsoll Industry Analysis covers both financially strong and weak organisations and highlighting threats and opportunities facing the market as a whole in 2011.
"Sadly, some of them are just too weak to carry on, and there will be a big spike of failures in the New Year," explained David Pattison, author of the new study. "On the flipside, their demise will bring a welcome reduction in competitive pressure for those left."
Despite the struggles of some, there are plenty of companies that have emerged strongly this year despite the difficult financial conditions they have faced.
"We have picked 439 strong companies that prove success can still be achieved in the fresh produce industry despite difficult trading conditions. They also prove that bad companies will fail in a recession; good companies simply do not. These companies will lead the industry out of recession with some smart acquisitions to help maintain their recent success,” he said.
Pattison remains convinced that the market is due further consolidation, with the number of companies in trouble leading to heightened takeover activity in the future, while also highlighting what he describes as 'reckless' companies that continue to chase sales despite mounting losses.
"There are a group of 140 serial loss makers still operating on the market. For the second or even third year running, these companies have made a loss," he said. "While the rest have taken painful or necessary decisions to refocus the bottom line, these reckless companies have continued to chase sales regardless. These companies have to cut their cloth accordingly or face the consequences."
In summary, the Plimsoll Analysis outlined a market emerging from recession with one-third of companies making a loss and a quarter in financial difficulty.
"If you are going to make a success of 2011, you need to learn the lesson of the last 12 months," Pattison concluded. "There are going to be big changes in the UK fresh produce industry with lots of takeovers, a number of high-profile failures and even the odd surprise or two along the way."
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