Iceland has had its cover pulled from a leading credit insurer as the jump in energy costs piles pressure on the frozen-food retailer.
Credit insurance protects suppliers against the risk of a retailer going bust between the point an order is delivered and payment received, helping to ensure all transactions go through.
It is unusual for credit insurers to target grocery retailers but Iceland’s reliance on large chest freezers means it is disproportionally vulnerable to the rise in energy prices.
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The removal of cover can prompt suppliers to demand payment upfront, squeezing a retailer’s cashflow.
It is now understood that the supermarket has entered into agreements with renewable-energy providers to lock in the price of 50 to 65% of its energy requirements for the next 15 years.
The frozen retailer’s energy bill jumped from £70 million to about £155 million this year. Last month Iceland said it plans to scale back the amount of chilled food it sells in an effort to reduce its energy bills.
The supermarket is stocking more room-temperature products instead of chilled, according to managing director Richard Walker.
Iceland is also utilising more modern fridges, putting doors on warehouse fridges and placing solar panels on stores and warehouses to be more energy efficient.
The news comes as Iceland has been named the UK supermarket with the fastest rising prices with a 10.1% increase since January 2022, new research shows.
