Colgate-Palmolive (India) said that it is directly engaging with its distributors to resolve their challenges.
According to media reports, distributors have decided to stop supplying products of Colgate Palmolive India (Colgate India) in Maharashtra in phases from January 1 owing to the issue of price disparities between the traditional trade and organised channel, which includes players like Jiomart, Metro Cash & Carry, and commerce B2B companies like Udaan, and Elastic Run.
This move is similar to the action the traditional distribution channel would take on Hindustan Unilever's (HUL's) products in the state, the reports added.
As per reports, the distributors resorted to this move after their apex body sent two letters to FMCG companies, complaining about the price disparities between traditional distributors and other organised business-to-business (B2B) distribution firms, both online and offline, which have entered the sector in the last few years.
This issue reportedly began as traditional distributors offer retailers margins of 8-12% against 15-20% offered by big-box B2B stores and online distributors.
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As a result, retailers have reportedly increasingly started lifting stocks from the organised channel.
The All India Consumer Products Distributors Federation (AICPDF), which has over 450,000 members, had sought a meeting with FMCG firms to resolve the issue, media reports said.
Offering a clarification on the same, Colgate-Palmolive (India) said that it has a strong relationship with its distributors and supply chain partners, developed over the past eight decades, based on mutual trust, fairness and transparency. Further, the company engages with distributor networks directly on an ongoing basis to address their business challenges including but not limited to a fair return on their investment.
The company has not, so far, engaged with the All India Consumer Products Distributors Federation. It is directly engaging with its distributors to resolve their challenges.
The company will ensure that supply of its products remains uninterrupted in the State, the FMCG company said in a statement.
Colgate-Palmolive (India) provides oral care products under the 'Colgate' brand. It also provides personal care products under the 'Palmolive' brand name.
The company reported 1.8% fall in net profit to Rs 269.2 crore in Q2 FY22 from Rs 274.2 crore in Q2 FY21.
The scrip rose 0.25% to currently trade at Rs 1467.70 on the BSE.
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