Exclusive: Grocers face further pressure following collapse of major Greencore supplier

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Grocers face the prospect of further pressure on food availability and price following the collapse into administration of a Dutch-Spanish fruit and vegetable grower.

Greencore sign on side of building, which reads: 'Greencore – food to go'

Fortuna Frutos UK was a major supplier to convenience food manufacturer Greencore

Retail Week can confirm that Fortuna Frutos UK, a subsidiary of Dutch-owned Canary Island tomato grower Fortuna Frutos Group, has collapsed into administration as soaring costs heaped pressure on the business, which had struggled during the pandemic.

The collapse will have a knock-on effect on Greencore, the Irish-based convenience food manufacturer, to which Fortuna Frutos was a major supplier of fruit and vegetables, such as tomatoes and cucumbers.

Greencore is one of the largest convenience food manufacturers in the country, supplying more than two-thirds of all supermarket sandwiches in the UK.

The food manufacturer specialises in salads, chilled prepared meals, chilled soups and sauces, ambient sauces, pickles and Yorkshire puddings. It also supplies grocers with some of their own-label products.

A grocery source said Greencore would be forced to change specifications in some of its products to omit affected produce and grocers could see supplies of vegetables affected on the supermarket shelf.

Data published by the Office for National Statistics in early April showed that costs for UK food manufacturers had hit “unprecedented” levels and that UK food and beverage consumer prices rose at an annual rate of 5.1% in February – the fastest pace in more than a decade.

The sector is facing a cost increase triple-whammy driven by soaring wages, international shortages in commodities such as feed and fertiliser, and soaring energy costs.

Many are also seeing weakening demand as people cut back on food spending, with consumer confidence levels hitting lows in April.

A Greencore spokeswoman said: “Greencore has a wide range of supplier relationships and has extensive contingency plans in place for any change to its supply base. As a result, our customer service levels and product availability have been entirely unaffected by this development.”

According to Fortuna Frutos UK’s last set of full accounts up to August 31, 2020, filed with Companies House on May 28, 2021, the business made a £1.2m loss before tax on a turnover of £41.6m.

It struggled as a result of rolling lockdowns in 2020, blaming the fact that many of its core customers were “foodservice businesses within the catering and processing sectors, which have been hard hit” by the pandemic.

However, its food retailing arm had a strong year “as supermarkets have remained open during the year and have experienced higher demand”.

In his strategic report, director Jose Morales blamed “the impact of the pandemic, the uncertainty regarding Brexit and heavy competition within the market” for the fall in gross profit margins.