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Premier Foods refines ‘Invest for Growth’ programme

08 December 2014

Premier Foods announces that, having reviewed the comments about its ‘Invest for Growth’ programme in recent days, it will simplify the details of its future programme to a more conventional type of discount negotiation potentially based on price, value or volume based rebates, or lump sums. Premier Foods launched its ‘Invest for Growth’ programme in July 2013 as part of a broader initiative to reduce complexity in support of its plans to help turnaround the Company.

The programme is designed to support strategic partnerships with a smaller group of suppliers that that will help deliver growth for both Premier Foods and its suppliers over the medium term.

Gavin Darby, Chief Executive Officer, said:

"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. Many of our suppliers have chosen to invest with us and have grown their business as a result, despite the challenging market environment.

“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, potentially based on price, value or volume based rebates, or lump sums. The most important aspect for us is that we continue to develop strategic supplier partnerships that are focused on delivering mutual growth."

Last week, Premier Foods was revealed to have asked for money under a so-called pay-and-stay arrangement. Darby said that following a company restructure, "we will now require you to make an investment payment to support our growth."

The arrangement was widely condemned by the industry, government and media.

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