Premier Foods is to rethink its controversial Invest for Growth programme after it became a “political football”.
The programme asked suppliers to make an investment payment to Premier to help fund the company’s growth strategy.
Originally revealed by The Grocer last July, the scheme came back into the spotlight last week after the BBC’s Newsnight obtained a letter that appeared to say the payments were a requirement for continuing to do business with Premier. Premier denied the payments were compulsory, and later responded by releasing comments from several of its suppliers that backed the scheme.
Yesterday, Premier said in light of criticism it had received, it would “simplify” the programme to “a more conventional type of discount potentially based on price, value or volume based rebates, or lump sums”.
Premier group corporate affairs director Richard Johnson today (8 December) told The Grocer the scheme had been “hugely misinterpreted”.
”We’ve been made a political football,” he added, ”often by commentators who haven’t spoken to us at all.”
Johnson said the company had faced a choice: “Do you dig your heels in or do you adapt and show that you’ve listened to what people think? We took a decision that this is a fight we don’t want to be front and centre of.”
Premier CEO Gavin Darby yesterday released a statement outlining the company’s decision to ditch the scheme. “Our Invest for Growth programme has worked well for us over the last 18 months in allowing us to consolidate our supplier base and invest in innovation, marketing and promotions to support our brands,” said Darby. “Many of our suppliers have chosen to invest with us and have grown their business as a result, despite the challenging market environment.
Over the last few days it has become apparent that this mechanism has been widely misunderstood and misinterpreted
“Most companies look for value from their suppliers and will commonly negotiate discounts or lump sums wherever they can which will be offered and accepted by suppliers if they believe their business will benefit. This is standard business practice. The investment payments we have requested from our suppliers are effectively just one form of discount of which there are many different types.
“Over the last few days it has become apparent that this mechanism has been widely misunderstood and misinterpreted.
“In this situation, we are fully prepared to simplify the details of our future programme to a more conventional type of discount negotiation. The most important aspect for us is that we continue to develop strategic supplier partnerships that are focused on delivering mutual growth.”
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