Premier Foods defends its pay and stay tactics

 
Kasmira Jefford
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Premier Foods is behind some of Britain’s most renowned brands
Premier Foods promised yesterday to “simplify” its practice of asking suppliers for payments in exchange for doing business with the firm after receiving widespread criticism for the so-called “pay-to-stay” practice.

The food company behind some of Britain’s most renowned brands including Mr. Kipling, Ambrosia, Oxo and Bisto, did not apologise for its actions, which it said have been “widely misunderstood and misinterpreted” over the last few days.

However chief executive Gavin Darby did say it would revert to a more “conventional” approach of seeking discounts from suppliers based on price, value or volume based rebates or lump sums.

A BBC Newsnight investigation aired last week revealed that Darby had sent a letter to suppliers telling them “an investment payment” was required.

Shares in the company fell over six per cent on Friday in the wake of fierce criticism of the “pay-to-stay” scheme. Business secretary Vince Cable described it as “wrong” while John Allan, chairman of the Federation of Small Businesses, said that Premier Foods “should be ashamed of themselves”.

Premier Foods defended its programme by arguing that suppliers who contributed “have grown their business as a result, despite the challenging market environment.”

In October Premier Foods announced a profit warning for 2014, as third-quarter sales dipped in amidst difficult market conditions. In March of this year the group sealed a £1.1bn refinancing package issued put it on sounder financial footing.

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