Our favourite brands are failing – and the stock market is following suit

There is a sink-or-swim feeling about the City at present, with not much in between. Some companies, among them household names, are going under or struggling, while others, also well known, are busy buying or selling. TGI Friday’s, the UK end of Pizza Hut, Prezzo, Wilko and Typhoo Tea are all on the casualty list, while the likes of Darktrace, Royal Mail, Virgin Money and cardboard giants DS Smith are being bought.

In the last three days alone, there have been three takeover moves for stock-exchange-listed firms: for insurer Direct Line, waste disposal firm Renewi, and the owner of Cosy Club bars, Loungers.

In total, this year so far has seen bids of £52bn for quoted brands. At the same time, the London exchange is set to register its lowest number of flotations on record, with just 14 IPOs across the two main markets. Also, while startups continue to be generated at pace, established businesses that have been around for decades are collapsing.

There is plenty of money available, but only to those deemed to have a future, to possess real potential. Where once, investors and funders might have been prepared to take a risk, they are not any more.

It’s brutal. Our changing dining habits mean there is falling demand for stodgy, carb-loaded food. Sourdough and salad are the new order. The old pizza staples and restaurant chains? Out. They are not given time to adapt, to change their menus. The view is that, however much they try, they are hamstrung by their name. Punters will always see them as providers of volume. Combine that with the mounting overheads of operating on the British high street, and they’re goners.

Wilko or Wilkinson does not sell anything that Amazon doesn’t also sell, and probably for a lot less. It’s got the smell of the former Woolworths about it, and look what happened there. To the knacker’s yard…

Typhoo Tea had a break-in at its Wirral factory, which caused a lot of damage. That didn’t help, but truth be known, the 121-year-old British tea supplier was suffering from declining sales and rising debts. There is a possibility that Typhoo could be sold to Supreme, a London-listed manufacturer of vaping products, drinks and nutritional supplements, which is anxious to leave vapes before the regulatory axe descends on the disposables market. Otherwise, insolvency beckons.

Typhoo’s problem is encapsulated right there. While it could once claim to be iconic, the label doesn’t mean anything to today’s shoppers. It’s the tea their parents and grandparents drank – the one that didn’t have the chimpanzee adverts – but that’s it. Typhoo doesn’t convey meaning, it’s not aspirational, it doesn’t imply health and wellbeing – unlike, say, Supreme.

Consumers today also want authenticity in their food and drink purchases – they want to know where it’s from, what it contains, what it does. Typhoo provides none of those. It’s nebulous. Out.

If that seems harsh, that’s because it is. In the ferociously fast-moving, fiercely competitive, increasingly globalised marketplace, there is no room for passengers. Backers are not willing to wait for jam tomorrow: they want it now.

There is another influence preying on minds – the world is a far riskier place. In short order, we’ve had a series of disruptive events, including a worldwide pandemic that caused businesses everywhere to spasm. Having thought they were relatively immune to shocks, and enjoying relatively easy prosperity, they had a rude awakening. However brilliant they were, it didn’t matter: they pretty much all suffered. Recovery, too, was surprisingly slow.

Since then, we’ve seen a war in Europe, while the Middle East remains a powder keg waiting to explode. China may, just may, invade Taiwan. Donald Trump is returning to the White House, all guns blazing. The new British government is failing to inspire and proving to be no friend of commerce. Climate change continues to wreak havoc.

Nothing is safe, not least supply lines, energy bills and consumer demand. Put all that together and you have an appetite that has shifted. Spend, but make sure that what you’re getting is already buzzing – there’s no time to turn it around – and that it forms a perfect fit.

That spells danger ahead for the London stock market, for the top FTSE 100 and the lower mid-cap and smaller ranks. The ones that are attractive are being snapped up. They were undervalued, the result of being unappreciated by conservative UK institutions.

They may be in dull, non-sexy industries – packaging, waste disposal and postal services. Or they’re at the fashionable end, such as cybersecurity, in the case of Darktrace. Either way, their figures are strong and they’re succumbing to approaches – mainly, and tellingly, from rich foreigners, based in countries that afford their businesses higher ratings than cautious Britain.

This is weakening UK listings. To make matters worse, a series of big names have moved their registrations abroad, deserting the UK market and choosing to list elsewhere. The best ones are disappearing, leaving a rump that does not offer the same returns. This is in an international, digital investment landscape, in which investors can just as easily put their cash into companies listed overseas as those in London.

Next year will see more exits. The government must act. Investors need to be encouraged to buy British, to support domestic stocks. The rules have to be changed to make investing easier and more accessible, and to persuade pension funds to break with traditional practice and spread their wealth more evenly. Unfortunately, the exodus coincides with an administration that shows no sign of appreciating the problem – quite the reverse.

This is proving a bumper year for bankers, lawyers, accountants, insolvency experts – and, from a patriotic perspective, it’s for the wrong reasons. Unless we act fast, 2025 only promises more of the same.