Premier Foods - Pay and Stay

[LeTiss]

I notice huge press coverage this morning over the tactics of Premier Foods to their suppliers. Either pay us an annual fee under the name of 'investment payments' or be delisted from our supply list

It's being investigated as some are accusing them of blackmail, but it's concept sounds suspiciously like Betfair Premium Charge to me!

http://www.dailymail.co.uk/news/article ... l-fee.html

http://www.bbc.co.uk/news/business-30338663

[steven1976]

I think its also common practice with a lot of supermarkets where you have to pay to have your products on their shelves. US companies are even worse. I've seen people get themselves in a financial mess because they have no other option with these things other than to accept it as they have their entire businesses dependant on one or two buyers.

[Euler]

I was involved in retail before going full time on Betfair. These sort of things are standard practice, though often achieved through 'rebates' or 'marketing contributions'.

Large retailers are a mare to deal with.

[PeterLe]

Premier Foods (MR Kipling); they want their cake and eat it..

(Morrisons are one of the toughist to deal with..very hard to negotiate with)

[Euler]

When you listen to this news article and replace the item under discussion with the words premium charge, it's hard to spot the difference.

http://www.bbc.co.uk/news/uk-30340621

[Online Trader]

Common practice in many industries, during my former life working in Building products in both the UK and Asia it was common to have to "contribute" just to get your products into certain retail outlets. Not naming any names but B&Q.............................

[Euler]

PC World used to charge up to £50k to list a product on an end cap and in a catalogue. The marketing department was seen as a profit centre rather than a cost centre and the buyers were pretty much sellers.

[steven1976]

Ive had it happen to me. Id rushed ahead with an order as it had a tight dead line for Chinese new year. The week after we had started I got a contract with all these extra costs for putting each product in their stores, i had to make inland delivery to all their stores etc... but it was to late to pull out. Ended up making a good size order for virtually breakeven and a lot of work.

The US is even worse I find as they want you to also fund the production and give credit lines for long periods after they have received the products and also want sale on return many times. The UK seems are bit more flexible in general although I would imagine they will definately work towards more none funding of orders until they have sold them.

The orders can be very good and profitable as long as you are prepared for all the costs and funding but for small businesses who get carried away, it can be the end of them as they end up with big cashflow issues and then they get stinkers chucked on them such as premier foods and they have no option as they have put all their production in pretty much one company.