Diageo hits back at supplier shame claims

By Neil Merrett

- Last updated on GMT

Related tags: Beer and breweries in multi regions, Guinness

Suppliers of major drinks brands such as Smirnoff and Budweiser have hit back at claims that they are neglecting and, in some cases, endangering small businesses by extending payment times across their supply chains.

Both Diageo and Anheuser-Busch InBev have been named this week on the Forum of Private Business’ (FPB) ‘late payment hall of shame' over claims they have extended the time taken to pay some smaller suppliers.

Phil Orford, chief executive of the FPB, said that the lobby group was calling on both manufacturers to sign up to the UK Government’s Prompt Payment Code in a bid to ensure greater sustainability in the supply chain.

"These two companies are attempting to claw back what they have lost as a result of the economic downturn by taking advantage of their dominant position in this sector at the expense of their supplier base,"​ he stated. "The UK's economy is in recession, and many small businesses are struggling to secure credit in order to maintain any kind of cash flow.”

Single payment plan

Diageo, which manufacturers a variety of products globally such as Guinness stout, said that by operating in 180 countries worldwide, the company had taken the decision to adopt a single payment scheme of 60 days for non-contracted occasional suppliers.

In a statement, the group said that the new payment terms had been amended from previous guidelines in the UK and Ireland of between 45 to 60 days.

“In the majority of cases, this is a maximum increase of 15 days,”​ stated the company. “Where suppliers are unable to operate within these terms, we have advised them to contact us to discuss alternative payment terms.”

Diageo claims that of 25,000 letters sent to its global suppliers, an estimated one per cent had expressed concern regarding the changes with no withdrawals reported from any suppliers working with the company.

The group claimed that it continued to work with its suppliers over payments though.

“As part of our change process we are also notifying our non-contracted suppliers of an alternative Diageo Purchasing Card payment process that will enable them to be paid within a few days for goods and services less than £1000 (€1135),”​ stated the company. “[This is] relevant to many transactions.”

Recently formed brewer Anheuser-Busch InBev was also singled out by groups such as the FPB for extending its own payments to 120 days from the end of the month, though was unavailable for comment at the time of going to press.

Related topics: Diageo

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