Hindustan Unilever’s (HUL) distributors in Maharashtra will stop supplying its products in phases in the state from January 1.
This is because the fast-moving consumer goods (FMCG) major has not come forward to discuss the issue of price parity between traditional and organised distributors.
Organised distributors include firms like Jiomart and Metro Cash & Carry as well as B2B firms like Udaan and Elastic Run.
Products which will not be supplied
Distributor in the state have decided to stop supplying Kissan range of products, which includes ketchups and jams, from January 1.
This will be followed by HUL’s face cream range under the brand Glow & Lovely eight days later if the company does not come forward to resolve the issue.
By mid January, distributors have decided to stop supplying Rin products, which include detergent soap and powder.
They have also decided to stop supplying all of HUL’s products to retailers from February 1 if the matter is not discussed. HUL has over 150 distributors in the state.
Describing issue
Traditional distributors offer retailers margins in the range of 8-12 per cent compared with 15-20 per cent offered by big-box B2B stores and online distributors.
Since the latter commits higher volumes, FMCG companies offer higher margins to big-box B2B players, giving them space to offer a higher margin to retailers.
As a result, retailers have increasingly started to procure stocks from the organised channel of distribution, thus hurting traditional trade.
In its list of demands, distributors have asked for uniform pricing and schemes across distribution channels in the country.
So far, Nestle India, ITC, Dabur and Marico have discussed the issue with the traditional distributors but it still remains unresolved.
HUL replied
The Company said, “General trade continues to be our largest channel and our distributors (redistribution stockists) are our valued partners.”
Our arrangement with our distributor partners is not exclusive. We sell and distribute our products across all channels such as general trade, modern trade, ecommerce and cash & carry B2B to make our brands available to shoppers and consumers.
As the new channels evolve, we will continue to take up new initiatives with an objective to help scale up business for our distributors.
It also said that during Covid, HUL extended support to ensure the safety and secure livelihoods of its distributor partners through initiatives such as vaccination drives and special insurance coverage.
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