The IPA has condemned Premier Foods for continuing to ask suppliers, which it is thought does include marketing services agencies, to pay an annual "investment" in order to retain roster positions.
The owner of brands such as Oxo, Mr Kipling and Bisto has admitted that it has written to its suppliers to ask them for “an annual voluntary investment” to secure future business opportunities.
In 2013, Carat was appointed to handle the company’s media account after Starcom MediaVest resigned as a result of the payment demand which was introduced last July through the ‘Invest in Growth’ Programme.
Agencies that currently work with the company on marketing their brands include JWT and McCann London.
It is understood that any company on its supplier list that chose not to “invest” would then lose their place on the roster.
Paul Bainsfair, director general of the IPA, told The Drum: “We have seen one or two examples of this in the past. We deplore this kind of behaviour. It is exploitative and counterproductive. If agencies feel they have no choice because otherwise they will lose the account they are bound to look for ways to save money when they service the account. So everyone loses.”
Premier Foods said in a statement that it launched the programme to support plans to turnaround its business, which included halving the number of suppliers and developing a “more strategic partnership focused on mutual growth.”
They added: “As part of the programme, our suppliers are asked to make an annual voluntary 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. We are delighted with the positive response we have had from many who are actively engaging in building a new partnership with us, including many small companies. Indeed, many of our suppliers have seen their business grow as a result"
According to BBC’s Newsnight, Premier Foods has made ‘in the low millions’ from the programme so far.