The average profit margin of the UK’s 30 largest grocery wholesalers has shrunk from 1.7% to a fragile 1.5%, The Grocer’s latest Big 30 ranking has revealed.

Margins fell for the fourth year on the trot - and the figures do not even include Waverley TBS and DBC Foodservice, which exited the rankings after falling into administration last year.

Although the Big 30 collectively increased sales by 4.9% to £24.5bn last year, pre-tax profits dropped 4% to £390.5m. Half of the companies on the ranking reported a decline in profits, led by JJ Food Service (-81.3%), CJ Lang (-63.6%) and Brakes (-47.1%).

Six companies also reported a drop in sales, including CJ Lang (-16.3%) and Makro (-9.1%).

“The economic climate has continued to put pressure on all aspects of the supply chain,” said 3663 MD Alex Fisher. “The market has remained very competitive but has forced suppliers to ensure that prospective customers are a suitable match for their offer and infrastructure.”

The Big 30 have also had to contend with duty fraud and the tobacco display ban.

Palmer & Harvey MD of commercial and sales Martyn Ward said: “The depth of the double-dip recession proved a stumbling block to growth in all sectors. The tobacco ban, expected to bolster sales in small shops, failed to live up to many people’s expectations. The Olympics also weren’t the boost they were expected to be.”

The fragile state of the wholesale sector was underlined by a Grant Thornton report published this week, which showed that as the number of food and drink business failures increased by 49% in the second half of 2012, versus the first half, the wholesale sector had borne the brunt.

“All the pressures facing the industry - weak sales growth, fuel and commodity cost inflation - are magnified in wholesale and distribution because of the low margins,” Grant Thornton food and beverage group research manager Tracey Jarvis explained.

However, it wasn’t all doom and gloom. Elbrook Cash & Carry and SERT-MST, which are new entries in this year’s ranking, notched up triple-digit profit increases. And six wholesalers reported double-digit profit increases, with Booker’s profits up £19m.

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