Source: Email poll of wholesalers

In an industry in which the average profit margin is just a wafer-thin 1.8%, rising fuel prices, energy costs and spiralling food prices could be viewed as a recipe for disaster. However, despite the gloomy economic forecasts wholesalers remain upbeat that they can come out safely on the other side.

Diminishing margins are the greatest concern, especially as one wholesaler revealed gas bills had increased 78% in the past 12 months. Of those who replied to our survey, 71% said they expected wholesalers to suffer due to tightening profit margins.

It's clear that fuel price increases are likely to hit delivered specialists hardest. "This will put pressure on bottom-line profitability and will have to be kept under review," said one such operator. Meanwhile, the chief executive of a leading cash & carry specialist said they could benefit companies in his particular corner of the market. Even so, he did not completely welcome the latest hikes.

"There will be additional costs for everyone who does delivery," he said. "However, our customers will have a hard time passing rising costs on to their own customers and for that reason so will we."

The national press has been full of headlines screaming about the threat to families of rising food prices. The multiple supermarkets have been clamouring to show how they are reducing the burden on consumers. But many wholesalers hope to benefit from the turn of events.

Two-thirds (67%) of wholesalers rejected the idea that rising food prices would have a negative impact on their business. Everyone was in the same boat, they pointed out. "Many costs are rising ahead of personal income," said one. "This is already being evidenced in consumer spending patterns across all sectors of the industry, not just wholesalers and independents."

The credit crunch could lead to shoppers abandoning the car for trips to out-of-town superstores and opting to shop local and often searching out bargains, some said.

"More consumers will shop locally if prices are right," said one cash & carry operator. "This is why we recently introduced an economy range for shoppers on a budget."

When it comes to working with suppliers to ensure wholesalers are not unduly disadvantaged by the increase in prices, the picture was mixed. More than half said they were working well with suppliers to ensure that everyone got a fair deal, but 43% said this was not the case.

"Some do, some don't, but in the end the distributor is responsible for his own margins," said one wholesaler.