Distributors of Hindustan Unilever Limited (HUL) have threatened a mass boycott after the FMCG company placed an advertisement for a new distributor in Madhya Pradesh.
The All-India Consumer Products Distributors Federation (AICPDF), the apex body of distributors, has threatened a mass resignation to protest the move.
This comes after the FMCG giant HUL issued a public advertisement in newspapers in MP. The advertisement stated that HUL was looking for new distributors in every district in MP. It said that as a parameter, the distributors must have prior experience with renown FMCG companies, a godown and the ability to invest ₹1 crore to ₹3 crore.
This move ticked off the distributors associated with AICPDF. The federation said that it resented HUL’s actions, “and lost confidence in the entire distribution system currently operating for decades in the State of MP”.
“Some of them are doing business for three generations, we are also concerned that HUL is losing its market share. We take this as an insult, when you have distribution in each and every district, suddenly there is a paper, but there is no clarity, hence, we will go for a mass resignation because it will create distress and hold back our capital,” said Dhairyashil Patil, National President, All India Consumer Products Distributors Federation.
The federation said it would go on a “mass resignation.” It further demanded answers from HUL.
When contacted by BusinessLine, a company spokesperson said “the advertisement relates to expanding our work with ‘general trade’ distributors and is not about removing our current distributors. We believe the prospects for general trade business are bright in the region and are looking to partner with distributors to leverage opportunities. We conduct our business fairly and transparently, and our associations with our distributors are bilateral. We value these relationships and will continue to engage with them directly.”
Over the past several months, the distributors have had a rub with FMCG companies, as the companies have added a stream of revenue by partnering with e-commerce players who directly buy the products from the companies instead of buying it from a distributor. While this gives eCommerce players a pricing and discounting power, distributors have alleged that the eCommerce players are latching on to deep discounting thus creating a dent on their revenues.