Distributors Revolt Against Hindustan Unilever In This State; Stops Selling Their Products

FMCG distributors in Maharashtra will stop selling products from HUL from January 1.

All India Consumer Products Distributors Federation (AICPDF) called for  a “non-cooperation” movement against FMCG companies from next year if B2B retailers continue selling at lesser prices.

This could have a big impact since Maharashtra is a key market for the maker of household products like Dove shampoo and Bru coffee.

The Issue

They have made the decision since HUL hasn’t responded to them regarding issues faced by offline distributors on account of B2B firms.

The wholesalers it has taken umbrage with in particular are Jiomart, Walmart, Metro Cash & Carry, Booker, ElasticRun and udaan.

These platforms receive better margins from the FMCG companies which in turn grant discounts to retailers and eat into their business.

AICPDF president Dhairyashil Patil said that traditional distributors are given 3.5-5% margins.

New platforms negotiate 12-15% margins given their bulk orders which is “disrupting the market”.

The Demand

In a nutshell, the traditional/offline distributor wants similar margins as given to organised distribution platforms.

The federation demanded that the distributors it represents receive the products at prices at which they can also offer the same prices as Jio Mart/ B2B companies.

They seek a level-playing field” from the manufactures between traditional distributors and other organised business-to-business (B2B) distribution firms.

Plan Of Attack

Initially, the Maharashtra distributors will stop supplying HUL’s Kissan brand of products starting 1 January.

It will then stop selling HUL’s beauty and cosmetics portfolio including brands such as Glow & Lovely if there is still no response over the next 8-10 days.

Eventually, it will stop supplying Rin detergent bars in the state.

It will refuse to launch any of the company’s new products unless it receives notice that the said product is not available with B2B retailers.

HUL’s Statement

A company spokesperson said in an email that its arrangement with distributor partners is “not exclusive”.

The company sells and distributes its products “across all channels such as general trade (GT), modern trade, e-commerce, cash and carry B2B etc.”

They said that they remain “fully committed to ensuring that our distributors earn a fair return on their investments and in enhancing capabilities in our GT network”.

Its distributors have conveyed to the company that they will reject any “attempts to create a wedge between the two.