Stalemate continues even as Hindustan Unilever, distributors meet

Distributors likely to take a decision on Tuesday

Hindustan Unilever (HUL) executives met distributors on Monday to discuss the issue of price parity between traditional and organised distributors.

According to a distributor, the fast-moving consumer goods major has proposed changes in stock-keeping units between traditional trade and organised distributors. 

These include the likes of Jiomart, Booker and ecommerce distributors like Elastic Run and Udaan. Currently, distributors in Maharashtra have stopped the supply of HUL’s Kissan range of products from January 1. Distributors in the state had also planned to stop the supply of Glow & Lovely range of products eight days later and Rin products by mid-January. Distributors had also planned to stop supplying all of HUL products within the state from February 1.

HUL, in an email reply to Business Standard, said, “In response to the request we had received from AICPDF (The All India Consumer Products Distributors Federation), company representatives met them to understand their concerns and get feedback about the evolving route-to-market (RTM) models.

HUL reiterated, “General trade continues to be our largest channel and our distributors (redistribution stockists) will remain our valued partners in our quest to serve the needs of our consumers across India.”

It added, “HUL remains fully committed to ensuring that our distribution partners earn a fair return on their investments and work collaboratively in enhancing their capabilities to make them future-fit.

HUL also said that as an organisation, it is committed to the highest level of customer centricity, and will make all efforts to address any specific issue bilaterally with its distributors to mutual satisfaction.

The consumer goods major also said, “HUL has a long-standing relationship with its distributors that is based on trust and mutuality of interest. Our distributors have overwhelmingly conveyed to us that they would continue to meet the needs of our shoppers and consumers in an uninterrupted manner.”

AICPDF is yet to comment on the discussion with HUL.

Traditional trade resorted to stop supplying products of HUL and Colgate India in Maharashtra in phases. This came after the apex body of distributors sent two letters to FMCG companies against the price parity between traditional distributors and other organised business-to-business (B2B) distribution firms.

This issue began as organised distributors give higher margins to retailers to the tune of 15-20 per cent compared to traditional distributors, who offer retailers margin in the range of 8-12 per cent.

Due to higher margins from the organised distributors, retailers have increasingly started to procure stocks from new-age players, thus hurting the businesses of traditional distributors.

AICPDF, which has over 450,000 members, had sought a meeting with FMCG firms to resolve the issue.

In its first letter sent earlier this month, AICPDF stated that if its demands are not met, it will start a “non-cooperation movement” against FMCG companies from January 1. In its list of demands, distributors have asked for uniform pricing and schemes across distribution channels (traditional and organised B2B). So far, Nestle India, ITC, Dabur and Marico have discussed the issue with traditional distributors, but it remains unresolved.

On Friday, HUL said, in an exchange filing, it will ensure that the supply of its products remains uninterrupted and also clarified that it has had no engagements with AICPDF so far.

“Our distributors have overwhelmingly conveyed to us that they will rebuff any attempts to create a wedge between the company and our trusted distributors,” HUL said in the exchange filing on Friday.

HUL had also said, “The company remains committed to ensuring that distributors earn a fair return on their investments and enhance capabilities in their general trade.”

The company said it has taken several actions such as deploying technology for order placements through its eB2B app, Shikhar.

It is supporting the distributors to increase their direct reach and has introduced specially-tailored programmes with reputed academic institutions to help them hone their business skills.

“Our arrangements with our distributor partners are ‘not exclusive’. We sell and distribute our products across all channels such as general trade, modern trade, ecommerce, cash & carry and B2B, among others, to make it convenient for our consumers to buy our trusted brands. However, based on shopper buying habits, channel structures and cost of operations, the assortment offered could be different,” HUL had said.

It added, “As channels evolve, we will continue to take up new initiatives with the objective to help scale up the business of our distributors.”