Last week it emerged that Asda completed the outright purchase of International Produce, its fresh food joint venture with Bakkavör, in October. As a result of the transaction, Bakkavör has dropped some of its "lower-margin" produce contracts, leading to a 19% drop in fresh sales year-on-year.
Asda said the purchase allowed it to work more closely with growers, getting a "better quality" product for consumers. The International Produce deal taking up an option set out when the joint venture began five years ago extends Asda's direct control over its fresh supply chain.
Asda is not the only retailer expanding its fresh food buying team. Over the past year, Tesco founded an international produce sourcing team, while The Co-op Group's takeover of Somerfield expanded its vertically integrated model into hundreds more stores.
A senior source within a produce marketer said the moves spelled trouble for middlemen who did not offer extra value to growers and retailers.
"The bog-standard middlemen such as those who just import from central Europe are the ones most at risk, but there are not enough big growers in the UK to deal direct with supermarkets," he said. "The middleman offers services to both customers and the grower base, such as pre-season finance and technical support. A supermarket couldn't do that."
Senior executives within the finance sector, however, said even large fresh food traders in Europe were concerned their businesses may be cut out of supply chains over the next five years.
"Businesses are trying to sharpen up their core offer," said one. "They are also taking financial precautions trying to diversify their customer bases, extending credit insurance on customers who are themselves middlemen, and other precautions."