The forum, a watchdog on poor payment practices, has removed the global brewer and distiller from its blacklist after meeting the company earlier this month.
Diageo was put in the ‘hall of shame’ in January 2015 for extending its payment terms, while introducing a new supply chain finance scheme as a cover.
To mitigate the impact, the drinks giant has now reduced interest on this scheme to 1% and introduced a maximum 60-day term for small and medium-sized enterprises.
‘No hidden extras’
Big firms still in ‘hall of shame’
- Premier Foods
In addition, Diageo committed to no hidden extras – such as supplier fees – and pledged to respond to irregularities in invoices within 48 hours of submission.
FPB md Ian Cass said: “Clearly, we needed a carrot and stick approach to late payment so that firms, once they have been put into the hall of shame then have the incentive to change their ways.”
The the forum has not yet removed Premier Foods from its ‘hall of shame’ after the manufacturer charged suppliers £5,000 to be on a new preferred supplier list.
Brewing, Food and Beverage Industry Suppliers Association (BFBi) chief executive Ruth Evans hoped Diageo’s example would stop large brewers from increasing payment terms.
“As one of the largest brand owners, Diageo is making a strong statement, which we hope others will follow,” Evans said.
‘Welcomes removal of Diageo’
“BFBi welcomes the removal of Diageo from the hall of shame, indicating the improvement in payment terms, in particular for small and medium-sized businesses.”
But Evans raised concerns over Anheuser-Busch (AB) InBev’s acquisition of its rival SABMiller to create a global mega-brewing giant.
“SABMiller is viewed, in general, as supporting a sustainable supply chain,” she said.
“However, the supply chain’s experience with InBev, in relation to payment terms is not positive.”
Meanwhile,Scottish craft brewer BrewDog has pulled Camden Town Brewery’s beers from its bars, after the north London craft brewer was acquired AB InBev.
BrewDog’s cofounder James Watt said the firm would no longer sell Camden Town’ s beer – including Hells Lager and Gentleman’s Wit – because it chose not to stock AB InBev products.
Firms still in FPB’s ‘hall of shame’
“Diageo values its long term and collaborative relationships with its suppliers and we were very happy to engage with the Forum for Private Business to discuss our approach to payment terms.
“We fully understand the importance of SMEs to the UK economy and to the sustainability of our own business and we’re pleased that the FPB has recognised our positive approach to this issue.”
- Spokeswoman, Diageo