FOOD and drink manufacturers in Yorkshire are under threat from the bitter supermarket price war, according to a new report.

The number of firms in the region’s food and drink sector facing significant problems had soared by 108 per cent by the end of 2014, the latest Red Flag Alert from Begbies Traynor shows.

Julian Pitt, the firm’s regional managing partner, has called on supermarkets to start treating suppliers more fairly in a sector that accounts for 12.5 per cent of the UK food and drink industry’s turnover.

He said: “The supermarket price war is intensifying and it looks like some of Yorkshire’s food suppliers are bearing the brunt.

“A perfect storm is brewing for SME food suppliers at the bottom of the food supply chain, with many suffering a double hit from larger suppliers demanding “loyalty” payments as well as vanishing margins as a result of the inevitable aggressive supermarket price war.

“In Yorkshire, as in the UK as a whole, the intensifying battle among the supermarkets for the lion’s share of consumers’ food budgets is taking its toll on suppliers in the food and drink sector. As rival brands fight to outdo each other on price, suppliers’ margins are being eroded with predictably damaging results and food and drink manufacturing businesses, many of which supply the major supermarkets, are struggling to survive.

“Begbies Traynor has warned that around 100 food and drink companies in the UK could go into administration this year. The findings come amid a bitter war of attrition between major players Tesco, Sainsbury’s, Asda and Morrisons as their market share is gnawed away by German-owned discounters Aldi and Lidl.

Bradford-based Morrisons has ditched boss Dalton Philips while Tesco has announced a round of store closures and major restructuring as it seeks to shore up its dominant position.

Mr Pitts said 127 food and drink companies in Yorkshire were struggling to make ends meet, compared to 61 a year earlier.

He added: “Unless the supermarkets start treating their suppliers more fairly and find longer-term solutions to their cost cutting exercise, we expect that across the UK more than 100 food and beverage suppliers could fall into administration before the year is up.

“Worryingly, with Yorkshire generating 12.5 per cent of the UK’s food and drink turnover, the economic risks associated with the current price war stand to take a particularly heavy toll on our region.”

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