The UK’s largest delivered wholesaler to the convenience market, Palmer and Harvey (P&H) went into administration this week following failed rescue talks.
Administrators PwC said 2,500 jobs will be lost with immediate effect.
P&H is also the country’s fifth biggest privately owned firm, with some 90,000 customers in total, including large supermarket chains, convenience stores, corner shops and petrol station forecourts.
PwC said the group had been “hit by challenging trading conditions in recent months and efforts to restructure the business have been unsuccessful.
“This has resulted in cash flow pressures and it has not been possible to secure additional funding to support the business.”
About 2.500 of the more than 3,000 employees were made redundant this week with the remaining employees kept on to “assist the joint administrators in managing the activities of the business to an orderly closure”, PwC said.
P&H had been in takeover talks with private equity firm Carlyle, but these fell through.
The firm is the UK’s largest tobacco supplier. It had been struggling with debts and owed substantial sums to key suppliers.
Analysts blamed the firm’s failure on a shift in shopping habits, fierce competition from the likes of Aldi and Lidl, and the arrival of Amazon, which has prompted some retailers to take over food wholesalers.
Tesco’s £3.7bn takeover of food wholesaler Booker got the go-ahead from the competition authorities this month, and its rival Nisa has been taken over by the Co-op.