British Sugar dispute will hit Real Good’s results

REAL Good Food Co, the Liverpool-based manufacturer and supplier of sugar and other catering ingredients, has warned its dispute with British Sugar over pricing will have a “significant” impact on its full-year figures.

In February it reported British Sugar to the Office of Fair Trading (OFT) accusing it of abusing its dominant position in the market. This complaint is now with the Competition and Markets Authority (CMA) which replaced the OFT on April 1.

In a pre-close trading update Real Good said it expected to report earnings before interest, tax, depreciation, and amortisation of £3.3m but said the dispute, which is affecting Napier Brown and Garrett Ingredients businesses, “masks good progress across the rest of the group”.

As well as Napier Brown and Garrett, Real Good also has the ingredients firm Renshaw, jam and bakery ingredients specialist R&W Scott and patisserie maker Haydens Bakery.

British Sugar, owned by Associated British Foods, has a monopoly over UK beet sugar supply. Real Good says Napier Brown has been forced to pay “over 95% of the imposed price” during the dispute. The higher prices have “prevented Napier Brown from effectively competing commercially” and British Sugar temporarily withdrew supplies, according to the company. After first announcing the dispute in February, Real Good’s shares fell from 61.5p to 46p. They closed at 38.7p yesterday.

Chairman Pieter Totte said: “It is a pity that our results will be dominated by the dispute with British Sugar, as we continue to make good progress on our strategic plans elsewhere within the group. We believe strongly that the CMA needs to act, in order to maintain a competitive structure in the UK sugar market, particularly with the impending ending of production quotas in 2017. Meanwhile, we will not be diverted from our long term plans, both in sugar and across the other business, all of which offer exciting growth opportunities.”