Sad to see the fate of Farmison. Once described by the FT as “online meat magnifico” Farmison was set up over a decade ago to do the right thing for consumers (“eat better meat”) producers and their animals. The business ceased trading with immediate effect on 6th April - devastating for all involved, especially the many employees made immediately redundant.
In my experience Farmison offered a superb, well presented range that was easy to shop on their excellent website, easy on the conscience, and topped off with great service. And, as their sales growth testifies, I was not alone.
Three thoughts occur:
1) How robust was the forecasting?
Forecasting sales is never easy but what matters more than the number you come up with is the assumptions behind your number. For many online businesses the accelerated growth rates of the pandemic seemed to herald some fundamental change in consumer behaviour and supported new levels of ambition. Farmison, with sales of £10.3m in 2020, seem not to have lacked ambition as they reportedly aimed to grow sales to £100m (The Grocer). A laudable ambition, yet one wonders if and how far that ambition might have been based on an assumption that “current trends continue”?
2) “Sales is vanity, profit is sanity”
Farmison’s strong sales growth was outpaced by even stronger cost growth, and not just in materials or cost of sales. Their accounts show that the cost burden in 2021 grew yet faster in distribution and administrative costs. Farmison was not the first business, and won’t be the last, to feel the pressure of this revenue / cost dynamic. No doubt many other factors were at play but fundamentally costs and sales have to track over time with a margin between them. As an old colleague of mine was wont to say: “sales is vanity, profit is sanity”.
3) Hemingway
Quite recently, Farmison seemed confident about its future. And now……I’m reminded of the Ernest Hemingway quote: "How did you go bankrupt?" Bill asked. "Two ways," Mike said. "Gradually and then suddenly."
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