A senior city analyst has warned that, with many businesses teetering on the brink of bankruptcy, a bad summer may see the market drastically altered.
Phil Jackson, head of food & agriculture at Grant Thornton, told freshinfo that suppliers need to rally around against supermarket power to prevent closures across the board.
“I think the suppliers should gang up against the retailers and stand firm,” he said. “Traditionally the fresh produce industry has been very competitive and people tend not to trust each other, but they need to put this aside otherwise they will just be left playing along to the tune of the retailers.”
The comment follows positive trading results from large suppliers such as Fyffes and Total Produce, with the latter making bolt-on acquisitions in the last year.
Jackson believes there is a trend of larger businesses taking over smaller ones, with a “survival of the fittest” mentality prevailing.
“There are some companies in a good position,” he said. “Acquisition prices are cheap so stronger companies need to weigh up whether to take out their rivals in buy-outs or see if they go out of business.”
Jackson warned that after two bad summers, companies in the salad industry in particular could be hit hard by another. “If the summer is good, consumer demand [for salads] is very high and you have to be able to cater to this, but if it’s bad it is a disaster,” he added.
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