Premier Foods defends "invest for growth" programme

05 December 2014 by
Premier Foods defends "invest for growth" programme

Premier Foods has defended a controversial scheme that asks its suppliers to pay a fee in order to continue doing business with it.

Details of the programme, known as "invest for growth", were revealed last night by the BBC's Newsnight programme.

The programme claimed that Premier Foods had received millions of pounds from its suppliers in this way.

But the company, which owns brands including Bisto, Oxo and Sharwoods, said it was confident the scheme did not break any competition law rules.

The news came to light after the BBC saw a letter sent by Premier Foods chief executive Gavin Darby, dated 18 November, that stated:

"We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas."

"We will now require you to make an investment payment to support our growth.

"I understand that this approach may lead to some questions.

"However, it is important that we take the right steps now to support our future growth."

However the programme claimed that when a supplier queried the payments with the company, another member of staff responded: "We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list."

The practice was criticised by the Federation of Small Businesses. A spokesperson said: "This is the first time that we have ever seen anything so blatant… in this very direct way before. We think it is unjust, it is not competitive and it is not helping the supply chain."

Defending its actions in a statement, Premier Foods 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 turnaround 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."

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