Hindustan Unilever Ltd’s (HUL) ignorance towards the price disparity issue between traditional distributors and organized B2B distributors has forced FMCG distributors in Maharashtra to put a halt on the supply of select products of the leading firm HUL from January 1.
HUL, however, emphasizes that the firm arrangements with its distributor partners are “not-exclusive and the prices offered by them to various channels, such as General Trade, Modern Trade, e-Com and Cash & Carry B2B, could differ depending on factors such as cost of operations and channels structures.
An HUL spokesperson said, “We sell and distribute our products across all channels such as General Trade, Modern Trade, eCom, Cash & Carry B2B, etc, to make it convenient for our shoppers and consumers to buy our trusted brands.” However, based on shopper buying habits, channel structures, and cost of operations the assortment offered could be different, the spokesperson added.
He further said with evolving channels, HUL will continue to take up new initiatives to help scale up business for its distributors and to strengthen its distribution.
This development is on the back of fast-moving consumer goods (FMCG) distributors seeking a “level-playing field” from the manufactures between traditional distributors and other organized business-to-business (B2B) distribution firms.
The All India Consumer Products Distributors Federation (AICPDF)- a body that represents dealers and distributors, is negotiating with several FMCG makers.
AICPDF, which represents over four lakh distributors and stockists across the country had also asked for a “non-cooperation” movement against FMCG companies from next year if B2B retailers, such as Jiomart, Walmart, Metro Cash & Carry, Booker, ElasticRun, and udaan, continue to sell the products at lesser prices.
However, the body said it has received responses from several FMCG makers over the issue except for HUL, which is not responding.
Maharashtra distributors have stopped selling HUL’s Kissan brand of products. If the company continues to ignore the issue and does not address it in the next week, it will also stop selling HUL’s products under Glow & Lovely and Ron brands.
Responding to the same, HUL shows faith in the long-standing relationship with its distributors that is based on trust and mutuality of Interest.
“Our distributors have overwhelmingly conveyed to us that they will rebuff any attempts to create a wedge between the company and our trusted distributors,” an HUL spokesperson said.
General trade (GT) continues to be the company’s largest channel and our distributors (redistribution stockists) are and will remain its valued partners, it said.
“We remain fully committed to ensuring that our distributors earn a fair return on their investments and in enhancing capabilities in our GT network,” said HUL.
Earlier, AICPDF had written to companies informing them that B2B retailers are offering FMCG products to the retailers and local shops at lower products, what they offer and it is now “adversely affecting” their reputation and goodwill.
“Hence, we demand that we also receive those products at prices at which we can also offer the same prices as Jio Mart/ B2B companies,” the association had said in an open letter to FMCG companies.
Moreover, the AICPDF had also said its members will also “not launch any new product of the company” unless it gets an undertaking from the FMCG makers that the said product is not available with B2B retailers.