Colgate-Palmolive on Tuesday in a regulatory filing informed that it is directly engaging with its distributors on the margin parity issue. Representative Image
All India Consumer Products Distributors Federation (AICPDF) has called off the boycott of Hindustan Unilever (HUL) products after the company met its representatives and addressed their concerns about emerging business-to-business platforms and cash-and-carry players such as Udaan, Jumbotail, Walmart Best Price, Metro Cash and Carry, the association said on January 4.
“HUL has given assurance that it will give serious consideration to protecting the interests of its distributors and will take action against ill-practices in the market if proven correct,” said the association.
Therefore, it added, we are ending the protest against HUL for now and will keep an eye on developments in the market for the next three months. “If the company, does not improve its practices after three months, then we will start the campaign again.”
AICPDF, however, will continue to agitate against FMCG firm Colgate-Palmolive (India) and distributors in Maharashtra will not stock Colgate Max Fresh. AICPDF has warned that if the company continues to ignore its demands, distributors will boycott other brands by Colgate-Palmolive.
“We had written all the major companies in the FMCG segment and most of them have given us an assurance about addressing our concerns, but Colgate-Palmolive continues with its stubborn attitude,” the association said in a strong-worded press statement on Tuesday.
“Hence, as announced earlier, we will start the boycott of Colgate’s Max Fresh brand in Maharashtra market and if the company still doesn’t pay heed to our complaints, then we will stop stocking Colgate Vedshakti also from next week onwards,” warned AICPDF.
Colgate-Palmolive on Tuesday in a regulatory filing informed that it is directly engaging with its distributors on the issue. “Please note that the company has a strong relationship with its distributors and supply chain partners, developed over the past eight decades, based on mutual trust, fairness and transparency,” the company said in a response to a clarification sought by the exchanges on the news reports that certain Colgate-Palmolive products will go off shelves in Maharashtra.
Read: Colgate-Palmolive says it is working with distributor network to resolve their challenges
“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 informed.
Colgate-Palmolive, however, also said that it is not engaging with the AICPDF.
“Please also note that the company is not aware of any information in this regard that requires disclosure to exchanges. Further, there is no material impact of the news article on the company and the company will ensure that supply of its products remains uninterrupted in the state,” it added.
Reports of a conflict between FMCG companies and their distributors emerged in the first week of December when AICPDF wrote to 25 FMCG companies, demanding margin parity with online B2B platforms and cash-and-carry players. While most companies held talks with the association by December-end, HUL and Colgate-Palmolive were yet to respond, which piqued the already disgruntled association and led to a boycott of their products in Maharashtra.
Why HUL, Colgate-Palmolive are in a tussle with distributors
The association alleges that FMCG companies such as Hindustan Unilever and Colgate-Palmolive are offering higher margins to these platforms, hurting the business of its members. FMCG companies offer 3.5-5 percent margins to traditional distributors, but new platforms can negotiate 12-15 percent margins, given their bulk orders, distributors say.