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  • From: Leigh Hauter <lh AT pressroom.com>
  • To: market-farming AT lists.ibiblio.org
  • Subject: [Market-farming] promotional allowances
  • Date: Fri, 7 Mar 2003 00:54:07 -0500

Title: promotional allowances
this sounds like payola or a bribe to me, but does anyone have experience with paying promotional allowances to get a restaurant or store to take their produce?



CONSTANCE L. HAYS WITH SUZANNE KAPNER NEW YORK TIMES:

Payments from food manufacturers to food service companies --- which supply restaurants and other food preparers like hospitals, schools and stadiums --- have been a long-accepted practice in the industry. But the use of such payments, known as promotional allowances, has become more aggressive in recent years, as the food service industry has consolidated and become more competitive, executives and suppliers say.
"The old days of slapping a guy on the back and giving him a check for $200 and putting the product in are gone," said Richard P. Boris of Palo Alto, California, a longtime sales manager for manufacturers who calls on food service companies as well as supermarkets. "It can cost you $15,000 a year now, or $50,000 if you want a package."
The practice has come under intense scrutiny after the disclosure last week by Royal Ahold, a grocer and food distributor based in the Netherlands, that it had overstated earnings by $500 million for the last two years as a result of accounting problems connected to payments made to an American unit, U.S. Foodservice. The promotional allowances to U.S. Foodservice were "in some instances booked too high," the chairman of Ahold's supervisory board, Henny de Ruiter, said.



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