Food sector supplier seeks solution to increased procurement prices

Case Study
March 23, 2023

A company that supplies products to the food sector found itself facing a doubling of procurement prices. This was mainly due to increased raw material prices, delays within the supply chain, and higher energy prices. The issue was then: to what extent can we pass on the increase to our customers? And what would that increase mean for our working capital and financing?

Financial restructuring

Together with the supplier, PwC's financial restructuring team first looked at the company's annual plans and calculated whether achieving the forecasts was still possible under the prevailing circumstances. Decisive aspects here were the arrangements the company had made with its suppliers and customers regarding the time frames for the prices. Were these still fixed for a certain period or were they (partly) variable? We also used data analysis tools, among other things, to update the company's pricing strategy.

Passing on price increases

By taking a careful look at the market and talking to customers of the company, we came to the conclusion that it would be possible to pass on a large proportion of the price increases. Additional funds were needed, however, to make the supplier better able to meet its day-to-day financial obligations and to absorb future setbacks. Among other things, a new structure for financing working capital was the solution.