Mr Kipling’s ‘exceedingly murky plot to blackmail’ its suppliers

ONE of Britain’s biggest food manufacturers has threatened to stop working with any suppliers who refuse to pay them an annual charge, in a move likened to ‘blackmail’.

Premier Foods – the owner of brands like Mr Kipling, Ambrosia, Bisto, and Oxo – has reportedly asked for millions of pounds from suppliers in return for continuing to work with them.

According to BBC’s Newsnight, a letter sent by chief executive Gavin Darby told suppliers the firm would ‘now require you to make an investment payment to support our growth’. When a supplier raised

‘Like a gun held to your head’

questions about the payments, another member of Premier’s staff replied: ‘We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list.’

One of the company’s suppliers, Bob Horsley – who has had a contract with Ambrosia in Devon for more than ten years – said he was ‘taken aback’ to receive the letter.

He added: ‘I really couldn’t see how they could be asking for money … I think it’s like blackmail as what they are saying is unless you pay this money you can’t do the work.’

He has decided not to pay, risking losing the contract, and said: ‘I’m just a layman but I can’t see how that is right.’

Another businessman said Premier had previously asked them for more than £70,000, but added: ‘I’d never pay anyone for work.’ Another said: ‘It’s like a gun held to your head.’

In October, the company reported a worse than expected 4.7 per cent fall in sales for the third quarter of the year, with branded goods down 4.1 per cent. Mr Darby’s letter to suppliers stated: ‘I understand that this approach may lead to some questions. However, it is important that we take the right steps now to support our future growth.’

Competition law states that in some cases, the so- called ‘ pay to stay’ approach can be illegal. But Premier Foods is confident its scheme is within the rules.

A spokesman told the BBC: ‘ The programme requires our suppliers to make an annual investment to help fund our growth plans.

‘In return, our suppliers benefit from opportunities to secure a larger slice of our current business. They also stand to gain as our business grows in the future.

‘In the current challenging environment, the support of all of our suppliers is crucial and we have had a positive response from many who are actively engaging in building a new partnership with us.’

However Labour’s business spokesman Toby Perkins said: ‘Where unfair practices emerge, the Government should be willing to take action.’