Analysis by Interpath Advisory director and national head of food and drink, Thomas Swiers, has shown that on average there were 34 F&B insolvencies between January and June 2024, down from a monthly average of 40 throughout the entirety of 2023.
Meanwhile, the latest figures from the Office for National Statistics (ONS) show that just 28 insolvencies occurred during July.
Swiers believes that this trend can be explained by both the food and drink inflation rate falling over the past year and interest rates being cut. Summarising the findings, he described the relationship between inflation, the Bank of England base rate and the number of insolvencies as a “striking dynamic”.
“As inflation bites, insolvency rates typically increase as we saw in the latter part of 2022 and into 2023,” Swiers said.
“The struggle with cost inflation, and ability to raise prices, has been well-documented amidst real structural changes in demand, and the higher interest rate environment put pressure on operators as the cost of debt funding rose.”
While the signs in recent months have been positive, Swiers cautioned that there remains a way to go before the sector returns to the status quo that existed before the Covid pandemic.
“We should remember that, when compared to pre-pandemic monthly rates of 20 to 23 insolvency cases, there’s still some way to go before anyone can make the call that the market has recovered,” he continued.
“The relatively low rate in July comes after a burst of insolvency activity in early Summer that was driven by challenges in specific sub-sectors, such as fresh foods and breweries, which has kept the three-month rolling rate of insolvencies stubbornly high.”
With 18 international offices, Interpath Advisory supports businesses, their investors and stakeholders across a broad range of specialisms spanning deals, advisory and restructuring capabilities.
In the past it has advised a number of businesses within food and drink on the sale and administration process, including Buxton Brewery in May of this year.
