Premier defends ‘pay and stay’ practice

The company own brands such as Mr Kipling
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Premier Foods has denied claims it has been ‘blackmailing’ companies into investing money – to stay as its suppliers.

It said the payments had benefited both parties, by building more ‘strategic partnerships’.

The food giant hit the headlines today after Newsnight discovered a letter written by the company’s chief executive, Gavin Darby, asking a supplier to “make an investment payment to support [their] growth”.

Premier Foods has now released a statement claiming that the investment into the company’s growth plans had received a “positive response” as suppliers in turn had benefitted from the investments.

The statement said: “We launched our ‘invest for growth’ programme in July last year as part of a broader initiative to reduce complexity in support of plans to help turn around the business.

“This included a commitment to halve the number of our suppliers and develop more strategic partnerships focused on mutual growth.

“As part of the programme, our suppliers are asked to make an annual voluntary investment to help fund our growth plans. In return, our suppliers benefit from opportunities to secure a larger slice of our current business. They also stand to gain as our business grows in the future.

“In the current challenging environment, the support of all of our suppliers is crucial. We are delighted with the positive response we have had from many who are actively engaging in building a new partnership with us, including many small companies. Indeed, many of our suppliers have seen their business grow as a result.”

Premier Foods has maintained that it was confident the scheme did not break any rules under competition law. The government said it was “concerned by recent reports”.

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