Premier Foods has, for the second year, required suppliers to make an annual investment. The Federation of Small Businesses said the firm “should be ashamed of themselves” for “demanding a cash gift under the threat of de-listing” and warned many smaller businesses would go bust unless so-called “pay and stay” arrangements were dealt with.
It said one small business in the South West was asked to hand over £1,700 “to secure the chance for future business”.
Simon Walker, director general of the Institute of Directors, said: “The news that Premier Foods could be forcing its suppliers into controversial ‘pay-to-stay’ arrangements is deeply disturbing.”
A Premier Foods spokesman 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,.”