Kent-based salads supplier Southern Salads has entered administration after 30 years of trading as a result of the drop in sterling following last year's EU referendum vote.
The company relied on European suppliers for fresh vegetables and fruit during the winter and early spring months. The sudden decline in currency following last year's referendum was not foreseen by the company, which affected its purchasing power for overseas-grown salads.
Southern Salads was unsuccessful in negotiating changes to its pricing terms with European suppliers, while also being unable to pass on its cost increases to customers, which included restaurants.
The company also invested heavily in 2014 to expand its production capability, which put pressure on working capital, and the expected increase in turnover never materialised.
Southern Salads engaged with FRP Advisory earlier this summer as it sought to restructure the business, including seeking new investment and engaging in sales talks. However, the pressure on cash flow proved unsustainable.
Ian Vickers and Chris Stevens, partners at FRP Advisory, have been appointed as joint administrators, and have ceased trading the business with immediate effect. They are seeking buyers for the assets, and all but a handful of approximately 260 staff have been made redundant.
Vickers said: "Southern Salads, a family run Kent-based business, 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.
"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 not foreseen by the company, leaving the business grappling with an immediate fall of between 10% and 20% in its purchasing power for overseas-grown salads required for the winter and early spring UK market which in turn put a severe strain on cash-flow.
"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."
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