Real Good Food Company's (RGD) sugar distribution subsidiary, Napier Brown, has become embroiled in a pricing dispute with British Sugar which has knocked trading and is likely to lead to a small pre-tax loss this year. The news caused the shares to plummet 26 per cent, although they have since clawed back some lost ground, rising 9 per cent on Monday to 51p.
The disagreement saw British Sugar withhold sugar supplies from Napier until it acquiesced and agreed to pay the imposed price, as it was under pressure to maintain supply to its own customers. Napier Brown then lodged a complaint with the Office of Fair Trading (OFT), alleging that British Sugar, which owns the entire UK sugar beet crop, had abused its dominant market position by forcing Napier to pay an anti-competitive price for sugar. Napier claims this is preventing it from competing commercially, putting short-term financial pressure on the company and is ultimately threatening its existence in the market.