Conviviality’s financial problems could disrupt prices in the market, as rivals seek to take advantage of the supplier’s troubles, Prestige Purchasing’s David Read has warned.

Read told MCA that service issues were already becoming apparent at Conviviality subsidiary Matthew Clark, which he said were probably to do with cash constraints.

While arguing the chances of the group going under were limited, he said the prospect of these service issues getting worse would be hugely disruptive to the sector.

Read told MCA: “It’s a business that’s still generating positive cash flows, and while there’s a lot of discussion over whether it will go bust, our view is that the chances of that happening are pretty limited – though it’s not impossible.

“I do think there’s a strong possibility, particular if they don’t get the funding, that they’ll be vulnerable to acquisition and break up.

“If that were to happen, this is one of those things where the risks are relatively small, but the impact of those risks occurring are very high, as Matthew Clark is such a dominant player in the marketplace

He continued: “We’re already seeing some service issues from Matthew Clark at the moment, mostly around product availability – probably to do with cash constraints, and their suppliers not being paid

“If you scale that up considerably over a period of time that could be very disruptive to the sector. A big consequence of that is partially security of supply, but more importantly about price.

“If you put such a big player, not necessarily out of the market, but into a disruptive place, others will take opportunities on price.”

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