More food industry failures have been reported in the first half of this year than in the whole of 2011.
Grant Thornton tracked 17 reports of companies going bust so far this year, against 15 in 2011. The increase puts the industry on track for a repeat of 2009 when, in the wake of the financial crisis, there were 27 reports of food companies going into administration.
“The numbers are quite scary,” said Grant Thornton analyst Tracey Jarvis. “They reflect the difficulties companies are facing from fluctuating commodity prices, reduced consumer spending and rises in energy and fuel prices.”
The majority of businesses to have failed in the first half of 2012 were in the bakery, dairy or meat and fish sectors. The two most recent failures were Peters Bakery and Bakery Products.
Peters’ administrators KPMG struck a common chord, blaming the “challenging retail environment on the high street, with rising commodity and energy prices squeezing margins.”
Other major insolvencies included DBC Foodservice, Eskimo frozen Foods and Sangs.
On a more positive note, just over half the businesses that collapsed were subsequently acquired. US soft drinks giant Cott Beverages snapped up Sangs and UK Dairy Sales saved Rock Farm Dairy.
Grant Thornton said insolvencies were likely to remain a key driver of mergers and acquisitions - of which it said there had been 26% more in the first half of 2012 than in the same period last year.