2010 looking good for wholesalers and distributors

Few would argue that 2009 was a difficult year for the UK drinks wholesalers and distributors industry, but early signs suggest that conditions in 2010 will be much brighter.

According to new research by industry analysts Plimsoll, the market is slowly emerging from the malaise of the last two years.
 
David Pattison, senior analysts and author of the 2010 Plimsoll Analysis said: "The recession tore through the market in ’08 and most ’09 like a tornado and accelerated the rate of change in the market.

Aggressive “growth at all cost” operators have been forced to abandon their reckless strategies and many have been caught out and are in real trouble. However, some amazing companies have come through the recession largely unaffected and look set to make 2010 their year. As the market continues to recover during the year the changes will continue to come thick and fast”.
 
When pressed on what likely changes he envisages in the market in 2010, Pattison said, “More job losses and consolidations sadly. Even as the market improves there are a lot of companies, large and small, that survived by the skin of their teeth and they have to rebuild their profit margins and efficiencies.
 
Pattison continued, “Our latest analysis projects that a further 11,000 jobs will have to be shed if companies are to get back to profit and remain competitive in 2010.

"Whether through natural wastage or compulsory lay offs, job losses are necessary. With the average sales per employee figure down to £402,000, employees need to “buy in” and contribute more to the recovery of their companies – if you still have a job expect to work much harder in 2010.

"£3 billion worth of profit has been wiped from the market in the last year and employers have no choice but to cut their cloth accordingly and get more from their resources.”
  
As for mergers and acquisitions Pattison said: “In all we named 139 companies in our latest analysis that are ripe for takeover or merger with a larger parent. It’s a buyers market in 2010 with many companies still recovering from the recession.

"Our report has picked some great examples of companies that are currently undervalued because of the recession that would be very attractive to prospective owners.

"For many struggling companies, a buy-out may be the quickest route to get the company back on an even keel – even if it means relinquishing their independence. Inevitably, this will further increase job losses as new owners would quickly look for efficiency gains and to synergise their new acquisition with existing operations”.
 
So, aside from a serious refocus of profitability and the inevitable job cutting and takeovers, does Pattison see any cheer in 2010? “There are some real good news stories out there," he said.

"We rated 314 companies as “Strong” in our latest report. As expected this number is down compared to previous years but these companies will lead the market out of the downturn. They have managed to be commercially successful without jeopardising their financial stability”.
 
The new Plimsoll Industry Analysis – Drinks Wholesalers & Distributors, gives an instant performance rating on the top 824 companies in the market.

Each company has been rated as Strong, Good, Mediocre, Caution or Danger according to their latest performance. A graphical and written analysis will tell you which companies are in trouble and who is getting it right.
                                
Readers of the drinks business are entitled to a £50 discount off this new edition of the Plimsoll Industry Analysis – Drinks Wholesalers & Distributors. Call +44 (0)1642 626400 for further details and quote reference PR/DR30.

Alan Lodge, 06.01.10