Not a month has gone by this year when I haven’t heard somebody from the British catering equipment industry declare that the market remains oversupplied.
The general consensus is that there are too many parties jostling to supply the same or very similar products and services in a climate where operators still tend to be a little conservative with their spend.
The proliferation of internet sales channels, and the ease with which somebody can start up a website one day and effectively begin selling catering equipment the next, would only appear to compound an already fragile situation.
Nobody expects sales to come easy these days, but with talk of companies quoting for business at rates they traditionally wouldn’t have dared consider — and margins getting battered from all sorts of angles — some onlookers are feeling understandably anxious about what the future might hold.
The inevitable consequence of any scenario where over-supply is an issue is that consolidation must, and will, occur. And in that context of conventional market economics, news of the financial troubles that floored Hansens Kitchen Equipment and Valera last month would suggest this process is firmly underway.
Both were forced into administration within a matter of days of one another, stunning the catering equipment community and sadly resulting in almost 50 people losing their jobs.
Valera had been operating for the best part of 20 years, while London-based Hansens, trading since 1946, was a high-profile name courtesy of its history and London showroom.
Without knowing the specific details of each case — and acknowledging that numerous creditors within the supply chain will inevitably be left out of pocket by what’s happened — the reality is that the situation represents exactly the type of consolidation that many have been predicting.
While the two companies in question operated in separate tiers of the market, their predicament inadvertently opens the valve to release some of the pressure that has been talked about, even if it is not immediately quantifiable.
Between them, both firms would have been responsible for £15m to £20m of business a year — a chunk of which will either be picked up anybody who may take over the assets of either business or swallowed up by the market in general.
This week, meanwhile, brings the news that UK Equipment Direct has called a creditors’ meeting in order to appoint a liquidator for the purpose of winding up the company’s affairs and distributing its assets.
I’m in no way suggesting that the demise of a handful of companies will correct the over-supply issues that the industry claims is proving detrimental to its health, but it could well signal a period of consolidation — if not transition — that many have been forecasting all year.
The question is: who’s next?