Administrations up 110 per cent in food and drink sector

Administrations in the UK’s food and drink sector were up 110 per cent year-on-year during the first half of 2023. The soaring levels of insolvency have been attributed to a range of factors including inflation, Brexit, COVID-19 and rising input costs.

New findings from Kroll have shown that 56 UK food and drink businesses went into administration during the first half of 2023, more than the entire total for 2022 (53) and an increase of 110 per cent from the figures seen during H1 2022.

Rising administrations in the sector lead to food and drink businesses accounting for 9 per cent of total UK administrations during the first half of the year, as businesses in the sector grappled with a broad array of persistent headwinds.

According to Kroll managing director Ben Wiles, the trend is not entirely in line with previous insolvency trends in the sector, with Wiles calling the soaring rates of administrations an “interesting development”.

He added: “Many of these companies are highly leveraged due to the hangover of COVID and are also affected by higher inflation and energy costs. When you factor in higher borrowing costs and a lack of working capital, it’s proving tricky for businesses in this sector.”

With interest rates continuing to rise, stubbornly high input costs and ongoing labour issues, there have been predictions that the industry’s prospects will not improve significantly during the remainder of 2023 and that more high-profile businesses could begin to be at risk of collapse.

Read more about concerns that rising insolvency levels will begin to spread to larger businesses.

Also see: Global and UK Food & Beverage M&A Insight - members can also access our comprehensive list of the world's leading private equity buyers of food & beverage brands.

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