A MAJOR food company which operates out of Wigan has backtracked on a controversial business arrangement with its suppliers.
Premier Foods, which produces Hovis brand products from its Cale Lane bakery site, has been criticised for its “pay and stay” deals.
It involves asking suppliers to pay if they want to remain on their books as part of a “voluntary investment to help with growth plans.”
Firms that do not pay risk being taken off its 1,000 strong supplier list.
In response to the criticism, Premier Foods has announced it “will simplify the details” of its Invest for Growth Programme.
Gavin Darby, chief executive officer, said: “Over the last few days it has become apparent that this mechanism has been widely misunderstood and misinterpreted.
“Many of our suppliers have chosen to invest with us and have grown their business as a result, despite the challenging market environment.
“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.”
Business experts group the Institute of Directors said it was “deeply disturbed” by the arrangement.
Director general Simon Walker said: “At a time when public faith in business is painfully low, such unacceptable behaviour puts a bullet in the chamber for those who think the heavy-hand of regulation is the only way to change the culture of corporate Britain.”
Premier Foods handed over control of the Hovis brand earlier this year to American firm Gores Group in a £30m deal.
It is now operated as a joint venture between the two with Gores owning the majority share. Premier Foods also produces Mr Kipling cakes and Bisto gravy.