The grocery industry has been warned that aggressive and potentially unethical financial demands between ­suppliers will become more commonplace - despite Premier Foods climbing down over its controversial “pay to stay” supplier scheme.

On Monday Premier announced it was scrapping its requests for upfront payments from suppliers, opting instead to “simplify” the programme to “a more conventional type of discount”.

Writing in The Grocer, CEO Gavin Darby said: “It shouldn’t be a big surprise that businesses seek to get best value from all their commercial relationships.” But others felt Premier’s policies were more aggressive than is typical.

One food manufacturing CEO said: “I haven’t come across that before among suppliers. We have growth incentives with all suppliers but they kick in when we’ve achieved the growth ­targets, not before.”

David Sables, CEO of Sentinel Management Consultants, agreed Premier’s terms were not common among suppliers, but argued the Mr Kipling manufacturer was merely “replicating the negative force” of the retailers driven by “desperation and survival”.

“This will happen more and more unless something is done to stop the high-pressure bullying behaviour of the retailers,” he said.

The Groceries Supply Code of Practice does not cover terms between ­suppliers. Groceries Code Adjudicator Christine Tacon said she is “too often” approached over such cases, which fall under the remit of the Competition and Markets Authority.

Appearing to reject recent suggestions from politicians, including shadow business minister Toby Perkins, that tighter regulations were needed, she insisted “the regulation between supermarkets and suppliers is perfectly adequate and clear.”

However, Sables argued that compliance to the code often depended on semantics - the difference between a request and a demand, for example - and that suppliers were reluctant to step forward over possible breaches because of the potential repercussions.

While Darby admitted to mistakes in its handling of supplier negotiations, corporate affairs director Richard Johnson said it had been used as a “political football”.

But communications experts called into question its media relations response as well.

“Regardless of the rights or wrongs of its actions, rapid backing down by Premier creates a clear perception that it was in the wrong,” said Rob Metcalfe MD of PR agency Richmond Towers. “As it is, Premier looks old fashioned, wrong-footed and unprepared for modern media and consumer interest in the detailed workings of businesses.”

Another senior corporate PR source said Premier had failed to adequately consider how the policy looks to a public mistrustful of big business. “It’s one thing explaining it to your industry contemporaries, but quite another to justify and defend in the court of public opinion,” he said.

Sables concluded: “Ultimately Premier decided they had more to lose by pursuing that strategy, but the response smacked of being sorry they were caught.”

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