UK grocery price war putting suppliers at risk - report

LONDON, Jan 16 (Reuters) - Britain's escalating grocery price war could force over 100 food suppliers to go bust, according to a report from business recovery specialists Begbies Traynor.

The firm said the worst performing sector in the fourth quarter of 2014 was the UK's food and beverage manufacturing industry as it had seen a 92 percent increase in "significant distress". Some 1,410 businesses now struggling to make ends meet, compared to 733 at the same stage last year, it said.

Britain's so called "big four" grocers - market leader Tesco , Asda, Sainsbury's and Morrisons , are cutting prices to narrow the gap with fast-growing discounters Aldi and Lidl in an attempt to win back lost shoppers.

Begbies Traynor (LSE: BEG.L - news) said the big grocers were squeezing suppliers' profit margins and elongating payment terms.

It cautioned said that unless the supermarkets start treating their suppliers more fairly and find longer term solutions to their cost-cutting exercises, it expected that more than 100 of the 1,410 "significantly" distressed food and beverage suppliers to fall into administration this year.

"With shocking increases in distress among the supermarkets' main suppliers, the largest chains need to tread very carefully if they want to prevent a new crisis creeping up through their supply chain," said Begbies Traynor partner Julie Palmer. (Reporting by James Davey; Editing by Mark Heinrich)