Iceland has acquired its biggest supplier, Loxton Food Company, after the business fell into financial difficulties.
Iceland CEO Malcolm Walker, who ate food prepared by Loxtons during his Everest expedition last year, said the deal would secure the financial future of the loss-making supplier.
Iceland would also benefit from its ownership of Loxtons, he added.
“In the current, highly competitive business climate, this strategic acquisition of a key supplier is a logical step forward that will help us to strengthen our competitive edge by stepping up the pace of product innovation still further, and securing the full benefits of vertical integration,” he wrote in a letter to Loxtons’ suppliers.
He added that the sous-vide cooking specialist and maker of frozen ready meals was behind “some of the most exciting product and packaging innovations made under the Iceland brand in recent years”.
Largely thanks to custom from Iceland, Loxtons tripled in size in two years, growing its turnover from £9.4m in 2009 to £33.1m in the year to 31 October 2011, according to accounts at Companies House. However, it failed to turn sales growth into profits, with losses of £5.9m in 2010 and £4.9m in 2011.
In the latest accounts, company and group balance sheets showed net deficits of £0.75m and £12.67m respectively.Loxtons said the financial performance of the business was “below expectations”, largely due to “operational issues” following the relocation of production from a factory in Stockport to a new site in Gorton, Manchester. It also suffered from excess capacity.