Premier Foods appears to be doing a U-turn on its controversial scheme that asks suppliers to pay a fee to continue doing business with the food giant.
News of what the company described as a "invest for growth" programme", which has raised millions of pounds to help support the business, came to light during BBC Newsnight, on Thursday last week.
In a letter to suppliers, Gavin Darby, chief executive of Premier Foods, which owns brands including Bisto, Oxo and Sharwoods, had previously written: "We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas. We will now require you to make an investment payment to support our growth.
"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."
The approach received widespread criticism and a spokeperson for the Federation of Small Businesses, said: "This is the first time that we have ever seen anything so blatant… in this very direct way before. We think it is unjust, it is not competitive and it is not helping the supply chain."
However, at the weekend Premier said that the scheme had been "misunderstood and misinterpreted" and would now revert to a more "conventional" way of operating, according to the BBC.
Mr Darby said: "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."
He added that invest for growth scheme had worked well for the company for 18 months, allowing it to consolidate its supplier base and "invest in innovation, marketing and promotions to support our brands".