Fury over Premier Foods ‘pay to stay’ scheme

[T_i_B]

If this happened in any other country, we'd call it "asking for a bribe".

http://www.theguardian.com/business/2014/dec/05/premier-foods-pay-stay-supplier

Small businesses have called for an end to “unfair” payment practices after it was revealed that one of the UK’s biggest food manufacturers had requested payments from suppliers to keep doing business with the firm.

Premier Foods, maker of Oxo stock cubes, Ambrosia custard and Mr Kipling cakes, asked for payments totalling millions of pounds from suppliers across the country, according to a BBC Newsnight investigation.

The Federation of Small Businesses (FSB) said the revelations were only the latest example of bad payment practices that were stretching suppliers to breaking point. It said one small business in the south west had been asked to pay £1,700 to secure its future business with Premier Foods.

“Premier Foods should be ashamed of themselves. Driving a hard bargain with your suppliers is one thing, but demanding a cash gift under the threat of delisting, is downright unfair,” said John Allan, FSB chairman.

[pipoman]

1. Similar things happen all the time in the US...

I don't know if Walmart started doing this, but they do it....I guess I don't know if they ask for payments, they do start buying from small manufacturers, build dependence, require high production and expansion of manufacturing capabilities. Then when the company is dependent and in debt, force them to dramatically reduce their prices or lose the business which would bankrupt the company. The most documented example is Walmart and Vlassic pickles...

Indeed, as Vlasic discovered, thereal story of Wal-Mart, the story that never gets told, is the story of the pressure the biggest retailer relentlessly applies to its suppliers in the name of bringing us "every day low prices." It's the story of what that pressure does to the companies Wal-Mart does business with, to U.S. manufacturing, and to the economy as a whole. That story can be found floating in a gallon jar of pickles at Wal-Mart.

http://m.liveleak.com/view?i=bac_1342681195

[T_i_B]

2. I've come across similar wheezes myself in the past

But on a much smaller scale then what Premier Foods were doing. Happily, Premier Foods appears to be backtracking.

http://www.bbc.co.uk/news/business-30367723