Premier Foods criticised for demanding money from suppliers

5th Dec 2014 08:13

Premier Foods, the owner of some of Britain's most popular food brands, has been criticised for asking suppliers to hand over money or face losing business with the company.The group's suppliers have received a letter requesting an "investment payment" and companies that do not pay up could be taken off Premier Foods' list of approved suppliers.The Federation of Small Businesses (FSB) said Premier "should be ashamed of themselves"."Driving a hard bargain with your suppliers is one thing, but demanding a cash gift under the threat of delisting is downright unfair," John Allan, national chairman of the FSB, was quoted as saying by the BBC."If the questionable practice being attempted by the likes of Premier Foods becomes the accepted norm, it may well sink those small firms without the cash reserve to prop up their larger customers."The FSB added that an unnamed small business had been told to pay £1,700 in order to remain on the firm's suppliers list, while BBC's Newsnight said Premier has made millions pounds from the practice."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," the firm told the BBC's investigative programme."This included a commitment to halve the number of our suppliers and develop more strategic partnerships focused on mutual growth.""The programme requires our suppliers to make an annual investment to help fund our growth plans," it continued."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."The firm, which announced a profit warning in October, added that the support of its suppliers was crucial in the "current challenging environment".Premier Foods shares were down 2.08% to 35.25p at 08:38 on Friday.