Premier Foods has reportedly issued a request that suppliers pay into a new “investment fund” this summer in conjunction with a major growth initiative.
This includes proposals to halve the 3,000 suppliers it works with by the end of 2014.
Published in The Grocer, the plans were revealed in a letter distributed to suppliers from Gavin Darby, new chief executive of Premier Foods.
In it, he said: “I believe we need to work with a smaller number of strategic suppliers in the future that can better support, and invest in, our growth ideas and with which we can build long-term partnerships. I have therefore asked our procurement team to initiate a strategic supplier review with a view to halving the supplier base to a new equilibrium by the end of 2014.”
Darby also said that Premier was planning a mutual investment programme with the entire supplier base from August this year. This would require suppliers to “make an investment payment”.
According to the report, Premier Foods required sums of £10,000 to £15,000 from smaller suppliers, and even larger amounts from bigger companies.
Recently, Premier Foods announced the proposed closure of a mill in Barry, Wales, and a split in the management structure of its milling business.
The company said it would be setting up a “dedicated management structure” to oversee Rank Hovis’ free trade business – and would “vertically integrate” its remaining milling operations into its bakery business.