Blog: AAK wins business amid Premier supplier review

Michelle Russell | 11 November 2013

Premier Foods plc this morning (11 November) announced it has signed a three-year, exclusive, oils and fats collaboration and product co-development deal with food ingredients group AAK.

The partnership is a result of Premier's 'Invest to Grow' programme, which the firm says has "enabled new opportunities to strengthen and grow relationships with key suppliers".

The group has recently been on a supplier offensive this year, cutting its network in half as part of a cost-saving plan.

In July, Premier revealed it had asked firms to sign up to "strategic partnership" deals that could lead companies to invest more in innovation and product development. A review of its business has resulted in the UK food group reducing its suppliers from 3,000 to around 1,500.

Reports today also revealed Premier is demanding small firms pay GBP5,000 if they want to remain on the company's list of prospective suppliers.

According to the Financial Mail on Sunday, the Oxo and Ambrosia foods producer has written to suppliers of equipment and services telling them of plans to introduce a ‘formal supplier appraisal process'.

"To cover the administration costs of initiating this programme in 2013, we require a payment from you of £5,000 plus VAT", the letter wrote.

Critics believe the cash-strapped firm is trying to ease its financial problems by leaning on small business suppliers that have little power to resist.

This new deal with AAK, however, just proves that with this new supplier strategy, where there are losers, there are also winners.

Premier did not return a request for comment on the supplier charges at the time of going to press.

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