Supermarket price wars are killing food suppliers

The number of UK food suppliers that have gone bust has tripled in the past five years, according to accountancy firm Moore Stephens.

More than 160 food companies became insolvent in 2015, which is more than three times the 48 insolvencies in 2010, according to the research cited by The Independent.

Over the last 12 month alone the figure has increased 11% from the period before.

The report blamed supermarket pricing wars, which became even more aggressive in recent years thanks to the rising popularity of German budget supermarkets Aldi and Lidl.

Moore Stephens said food suppliers are “bearing the brunt of the on-going supermarket “price war” as their profit margins are squeezed by big supermarket chains trying to offer consumers the lowest prices possible whilst maintaining their own profit margins.”

Duncan Swift, a partner at Moore Stephens, added that the price drops of the last 18 months were set to continue.

“With the likes of Aldi and Lidl announcing further plans for expansion, competition between budget and traditional supermarkets is only going to heat up,” he said.

This Is Money notes that in 2015 The National Farmers Union said that supermarkets had deliberately devalued “milk purely to get customers through the door.”

Business Insider previously reported that Aldi and Lidl increased their market share in the UK recently, as both attracted more customers to their more upmarket ranges of food.

In related news, Tesco — the UK’s biggest supermarket — is expected to reveal its first quarter of underlying sales growth for more than three years when the supermarket reports its full-year results on Wednesday, according to the Guardian.

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