Family-run Kent-based Southern Salads Ltd has closed its doors after 30 years in business, citing Brexit, the depreciation of sterling and the decrease in purchasing power for overseas-grown produce, among the main reasons for the company’s collapse.
Ian Vickers and Chris Stevens, partners at FRP Advisory have been appointed as joint administrators to the Tonbridge fresh salads supplier which provided a range of produce to supermarkets, restaurants and travel chains across the UK.
Southern Salads has stopped trading and the majority of its 260 workforce have been laid off.
“Southern Salads had traded for around 30 years and managed over the years to deal with the increasingly competitive pricing pressures from supermarkets and other retail chains faced by all food supply businesses,” says Vickers.
“The company invested heavily in 2014 to expand its production capability which put pressure on working capital and the expected increase in turnover never materialised. Turnover in 2016 reached over £30 million.
“Despite successfully producing over 50 tonnes of salad per day for its array of customers, the company faced an unprecedented pressure on cash flow in the immediate aftermath of last summer’s EU referendum vote.”
The sudden decline in sterling was also “not foreseen by the company” and the financial strain increased when the business was left grappling with a fallout of between 10% and 20% in its purchasing power for produce grown abroad.
Pressures increased as the business traded through spring, adds Vickers, and the company failed to negotiate any significant changes to its pricing terms with its suppliers in mainland Europe. It also couldn’t pass on its cost increases to supermarkets and other customers.
“The company relies on European suppliers for fresh vegetables and fruit from the Netherlands and Poland in the north to France, Italy and Spain in the south,” he says.
“Southern Salads engaged with advisers from FRP Advisory earlier this summer as it sought to restructure the business, including seeking new investment for the company and engaging in detailed sales talks with interested parties.
“Once both investment and sales negotiations came to an end, the pressure on cash flow proved unsustainable, leaving the company with no viable alternative other than to seek the protection of administration and begin the process of realising assets.”
Southern Salads had been trading in Tonbridge since 1996.