A fire sale of Watton Produce’s expensive packing equipment yielded poor selling prices ahead of the company’s closure.
The root vegetable supplier, which is to close formally next Tuesday, put all of its £25 million stock of equipment up for sale at an auction hosted by Clarke Fussells in Norfolk last week.
While some lower end items sold for “way over” the market price tag, other higher value equipment was sold under the hammer at dramatically low prices, some at just 10 per cent of the asking price.
Trade sources said the auction was a “sad day” for the sector, with a firm that was “once the envy of the industry” because of its packhouse going out of business.
The six-hour auction - which drew 300 people - saw anonymous representatives of all the large UK packers and processers present, alongside buyers from South East Asia, the Far East and Denmark.
It is believed that Watton’s business, which included supply to Bakkavör, Lidl and the School Fruit and Vegetable Scheme, will be absorbed by the main UK carrot firms.
One source sounded a note of caution for those left in the trade. He said: “It’s a sad day. It shows that continual downward pressure on price has dire consequences. Profit is not a dirty word and we are seeing too many companies go out of businesses.”
Much of the Watton equipment was less than five years old. One product listed at more than £180,000 brought in under 10 per cent of that.
However, some lower value items sold well. One large grower said: “Some of the items which should have been cheap - £1,000-£2,000 - were going for much more. Some people do not realise what the price is when new and when you add the lift out and auctioneers charge, it can be an extra 17.5-20 per cent more than the hammer price so you have to be careful.”
A spokesperson for Watton customer Bakkavör told freshinfo that its closure would not create a large problem: “We have contingency plans in place across our supply base in the event that any of our suppliers ceases to trade... We use more than one carrot supplier to support our volume requirements.”
One insider added: “Ten years ago, Watton was the envy of the industry - its packhouse was really modern. But it lost some supermarket contracts for bagged carrots with skin on. They carried on with prepared stuff but you can’t just do prepared alone.”
In June, Cambridgeshire business Alan Bartlett & Sons bought former Watton subsidiary Moray Coast Produce.
In its last accounts submitted to Companies House, Watton returned a pre-tax loss of £791,296 for the year to 4 April 2010, down from a profit of £152,798 the previous year. Its turnover was £20.8m in 2010, up on £18.1m in 2009.
Nigel Jenney, CEO of the Fresh Produce Consortium, described said: “I have a lot of respect for their business acumen and it’s a shame to see this. They have been a very professional business and outside their own business have been a strong supporter of broader industry goals.”
Watton could not be reached for comment.
No comments yet