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Supermarkets investors fret over potential Christmas supply shortage

Workers at Bakkavor Group PLC’s (LON:BAKK) factory in Lincolnshire have voted to go on strike over low pay, in a move that could cause a shortage in dips and ready meals over the Christmas period

Bakkavor -
Bakkavor is the UK's biggest manufacturer of humous, supplying Tesco and Sainsbury's

J Sainsbury PLC (LON:SBRY) and Tesco PLC (LON:TSCO) investors were sparked into a mild panic on Thursday after a warning that a key supplier of dips and ready meals was going to be hit by a strike at one of its factories ahead of the peak Christmas season.

On Thursday, workers at Bakkavor Group PLC’s (LON:BAKK) factory in Lincolnshire voted to go on strike over low pay, a move which the Unite trade union said could leave shelves at several major grocers empty of many popular meals including salad meals, wraps, soups and dips such as taramasalata and hummus.

Marks & Spencer PLC (LON:MKS) shares were the worst hit, down more than 1% to 174.2p, while J Sainsbury PLC’s (LON:SBRY) and Tesco PLC (LON:TSCO) were both down 0.6%.

The ballot for the strike saw support for the strike from 83% of Unite members who voted, although out of the thousand-strong workforce at Bakkavor's factory in Spalding, this represented 27% of the total.

The workers union is calling for a “substantial increase” in pay, having previously rejected Bakkavor’s offer to up pay by 3% overall – representing 1.5% pay increase and 1.5% lump sum.

The FTSE 250-listed food company recently posted £105mln in pre-tax profits from a turnover of £1.6bn.

Bakkavor said it was disappointed at the proposal being rejected, having had an “ongoing, extensive dialogue with employees and the Unite union”.

It added: “As a business, we have detailed contingency plans in place to ensure that we continue to serve our customers and that any disruption is kept to a minimum.

The ready meals company’s shares perked up 4% to 127p in afternoon trading on Thursday.

Quick facts: Bakkavor

Price: 149.2 GBX

LSE:BAKK
Market: LSE
Market Cap: £864.5 m
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