Squeezed From Both Sides

How Fresh Produce Companies Can Break Out of the Margin Compression Trap

Caught in the Crossfire: Fresh Produce’s Profit Crisis

Input costs rise faster than retail prices, putting increasing pressure on margins across the fresh produce supply chain. This creates a challenging environment — especially given that many companies currently operate with EBITDA margins well below 4%. However, a select group of outperformers consistently achieve margins in the above 10% range, demonstrating that significantly higher profitability is possible. For others, this margin compression highlights a structural vulnerability to even modest cost increases.

Retailers protect their margins by consolidating purchasing power through buying groups, such as AMS, Eurelec and Everest. This increasing buyer dominance further squeezes suppliers, who are already grappling with rising input costs.

In our experience, fresh produce companies can respond effectively to increasing margin compression. Four moves are essential to break the negative spiral.

Go Big: Secure scale and stability through a stable customer base.
Own Your Category: Become indispensable by leading the category — not just supplying it.
Sustainable Growth: Be fit for growth by building the capabilities for profitable and sustainable scale through cost transparency, complexity control and strong support functions.
Lock in Supply: Integrate your supply chain or strategically manage supply chain relationships to manage volatility and secure long-term access.

These moves are not standalone solutions — they build on one another to form a robust, scalable and sustainable business model.

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