The number of food and drink businesses that have gone bust has soared in the first half of 2023, amid rising inflation and increased supply chain costs.
According to new figures from advisory firm Kroll, more food and drink businesses have collapsed in the first six months of the year than in the whole of 2022.
The sector recorded 56 administrations to the end of June, compared with 53 in 2022.
Kroll put the increase down to the rising cost of borrowing, supply chain issues, inflationary pressures and falling consumer spending.
For example, Meatless Farm fell into administration earlier this year after its desperate search for new investment, but was saved by meat-free startup VFC.
However, across all industries, insolvencies increased from 429 in the first half of 2022 to 618 this year, with the sector sitting behind construction, manufacturing and retail.
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Kroll MD, Benjamin Wiles, told The Grocer: “We always see more administrations in the construction, retail and the hospitality sectors. They’re all affected by cost inflation, supply chain issues as well as wage and labour challenges.
“But what’s been interesting so far this year is to see the massive spike in the food and drink manufacturing sector.
“Many of these companies are highly leveraged due to the impact of Covid and are also affected by cost inflation and energy costs.”
He added: “When you factor in higher borrowing costs and a lack of working capital, it’s proving tricky for businesses in this sector.”
