The Maharashtra Consumer Products Distributors Federation (MCPDF) has decided to stop supplying certain products of Hindustan Unilever Ltd (HUL) from January 1 . The distributors' association said this decision was taken due to HUL’s refusal to engage with them on their concerns regarding lack of price parity between traditional distributors and organised B2B distributors.
The distributors’ body in a statement said that they will stop selling Kissan range of products from January 1 in the first phase and added that it will expand this “non-cooperation movement" to other products in the coming days if HUL remains adamant on not engaging with them on the issue.
Distress to offline distributors
This development comes after the All India Consumer Products Distributor Federation (AICPDF), the parent body of MCPDF, had written to about 24 FMCG companies to look into issues that are causing distress to offline distributors. It has demanded similar distribution margins as offered to organised B2B distributors such as JioMart, Metro Cash and Carry, Walmart, Elasticrun and Udaan among others.
The Federation has been stating that organised B2B players are distorting traditional distribution systems by offering the same products at cheaper prices to end-retailers.
Dhairyashil Patil, National President, AICDF said that the Federation wants the FMCG companies to take cognisance of the issues being faced by the traditional distributors and find a solution so that they get a level-playing field.
He said while most of the FMCG companies have decided to engage with AICDF on this matter, HUL has not yet responded. This has led distributors of HUL products in Maharashtra to take such a decision.
An analyst note from Edelweiss Securities noted that HUL now services 15 per cent of its demand digitally and does not expect this boycott to have a significant impact as consumers and shops can easily buy the products from online and organised players. It added that it expects HUL and distributors to come to an agreement soon, "since both need each other."