Palmer & Harvey (P&H), the UK's largest delivered wholesaler to the convenience store market, has gone into administration.
The company, which has around 90,000 customers ranging from small corner stores to the big supermarkets, has been "hit by challenging trading conditions" and "efforts to restructure the business have been unsuccessful", said administrators PwC.
"This has resulted in cash flow pressures and it has not been possible to secure additional funding to support the business," said PwC.
PwC said P&H employed around 3,400 workers and 2,500 had been laid off.
Matthew Callaghan, joint administrator and PwC partner, said: "The Palmer & Harvey name has been a trusted partner for retailers and suppliers for nearly 100 years. This is a devastating blow for everyone who has been involved in the business."
Among P&H's customers was Costcutter, which following the announcement has now confirmed a deal that sees the Co-op become its exclusive wholesale supplier across its Mace, Simply Fresh, Supershop and kwiksave stores from spring 2018.
Darcy Willson-Rymer, CEO of Costcutter Supermarkets Group, said: “With P&H no longer able to supply our stores, we have activated our contingency plans that will see our retailers supported by the Co-op and other suppliers in the run up to our deal with the Co-op.”
Mark Todd, national officer at the Union of Shop, Distributed and Allied Workers, said: “Usdaw is deeply concerned at the devastating news that Palmer and Harvey has gone into administration and that a significant number of redundancies have already been announced. The union is seeking an urgent meeting with the administrators to clarify what is going on and the implications for Usdaw members."
The collapse comes in the wake of Tesco's £3.7bn takeover of Booker, a P&H competitor, after the Competition and Markets Authority (CMA) gave the deal the go-ahead.
Giving evidence to the CMA, P&H warned it would need to consider restructuring if the deal went through because Tesco was its largest customer.