Small distributors in Maharashtra have decided to continue their agitation against Colgate Palmolive India even as they have suspended the campaign against Hindustan Unilever Ltd (HUL). This protest is against the backdrop of complaints that the fast-moving consumer goods (FMCG) majors were favouring large and internet-based wholesalers in pricing.
The distributors temporarily called off the stir after top executives of HUL met the members of the All India Consumer Products Distributors Federation (AICPDF), which represents over four lakh distributors and stockists across India, on Monday where the distributors were assured that their interest would be protected.
However, Colgate-Palmolive failed to address the concern and has not come forward for talks, AICPDF said in a statement. Hence, distributors would continue to boycott certain products of the oral care company, PTI reported.
What are distributors doing?
Distributors in Maharashtra stopped supplying products of Colgate Palmolive India from January 1 due to disparity in pricing between the traditional trade and organised distribution channels such as Jiomart and Metro Cash & Carry.
The distributors had said they would first stop procuring Colgate MaxFresh from January 1, followed by Colgate Vedshakti eight days later. By mid-January, they will stop supplying Colgate toothbrushes to retailers, according to a Business Standard report.
What happened with HUL?
In December, the distributors stopped supplying select products of HUL after raising concerns over the pricing disparities. They alleged the FMCG firm was offering better prices and margins to business-to-business companies like Booker, Elasticrun, Udaan, Walmart, JioMart and Metro Cash and Carry. These companies were offering better pricing options to retailers, distorting the traditional distribution channels.
What Colgate says?
Colgate-Palmolive informed the stock exchanges on Tuesday that it was working closely with the distributor networks to address the issue. However, according to a Mint report, the oral care company has not been in talks with the federation but is conducting direct discussions with its distributors to resolve the issue.
“We are working closely with our distributor network to address their most pressing challenges and help find solutions for them and the consumers we serve together,” Colgate said.
At an event in Pune, Colgate is said to have told its traditional Maharashtra distributors that it sold products across all channels at the same price, according to a report. However, distributors do not agree with the statement.
The apex body of the distributors sent two letters to the FMCG companies showcasing the price disparities before the agitation. Reports suggest traditional distributors offer retailers margins of 8-12 percent, while B2B store and online distributors offer 15-20 percent.
Future action
At present, the distributors are keeping a “close eye" on the price situation for three months, Mint reported.
“If the situation does not improve even after three months, then the organisation will again adopt the path of a fresh movement,” AICPDF said.
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