Many frozen food firms face collapse, according to new report Published: 08 August, 2006
A SOBERING report which shows that up to 20 per cent of frozen food companies are close to collapse, has just been published.
Plimsoll Publishing Ltd has just completed a detailed survey into the financial health of Britain’s top 500 frozen food businesses and the results do not make comfortable reading for the industry.
They found that 96 companies – or 19 per cent of the total – were in a danger zone while a further 141, or 28 per cent of the total, had reason to be worried about the future.
A further 94 firms (19 per cent) were turning out what was described as a mediocre performance.
Plimsoll Publishing put 47 companies (nine per cent of the total) into a ‘good’ category while 122 companies (24 per cent of those surveyed) were classed as strong.
The report summary does not differentiate between fish and no fish frozen firms. However, it is thought that fish companies are generally doing better than the rest, thanks to increasing sales fuelled by the trend towards healthy eating. But there are problems too because cod prices and energy costs are rising.
The financial performance of each company surveyed has been fully researched and the full study includes an individual analysis and an overall financial score, says Plimsoll. The 96 companies rated as being in the danger zone are suffering from low and declining margins and the report contends that their position is now so serious that even normal business decisions are becoming constrained.
However, all is not lost. David Pattison , a senior analyst on the project, maintains: “The simple message is change or risk failure. At these high risk companies, the managers need to act quickly to get their firms back on a decent financial footing. It seems that will see a period of consolidation. Job losses and certainly cost cutting are essential if they are to survive.”
He added: “Personally, I would not rule out a series of takeovers. Most of these companies are blissfully unaware of just how exposed they are.”
Only two months ago the industry watchdog, British Frozen Food Federation said it was working on a meeting with the retail trade to try to get the big retailers to improve the image of frozen food. They felt it was being given a down market image. Many BFFF members have been worried for some time that the major supermarket chains have been selling frozen fish and frozen food in general at too low a price and therefore giving a misleading picture. They said the business had been the subject of too many ‘Buy One, Get One Free’ offers – or BOGOFs as they are known in the trade, although Asda has now dropped this type of promotion.
The full 700 page study (priced £350) which gives a financial health check on each of the 500 companies, is available by e-mailing email@example.com or calling 01642 626400.
www.fishupdate.com is published by Special Publications. Special Publications also publish FISHupdate magazine, Fish Farmer, the Fish Industry Yearbook, the Scottish Seafood Processors Federation Diary, the Fish Farmer Handbook and a range of wallplanners.