FMCG: distributors call for government intervention in the showdown on FMCG price parity

New Delhi | Mumbai: India’s largest retailer federation calls for government intervention in its confrontation with fast growing consumer goods companies (FMCGs) who they say are selling products at lower prices to new wholesalers and B2B channels like Reliance JioMart, Metro Cash & Carry, and Udaan.

The Federation of Indian Consumer Products Distributors (AICPDF), representing around 400,000 distributors across the country, wrote to the Prime Minister’s Office (PMO) and Minister of Trade and Industry Piyush Goyal, requesting their intervention on the question.

“The brotherhood of distributors is in danger as companies like JioMart, Metro Cash & Carry, Booker, Udaan, etc. flout the law and use unethical tactics and predatory pricing to establish a monopoly and destroy age-old distribution networks, which will result in huge unemployment, ”the letters read.

ET reviewed copies of letters signed by Federation President Dhairyashil Patil.

Small and micro-sellers bear the brunt of “predatory e-commerce companies monopolizing commerce,” he said in the letters.

Distributors were looking for margins equal to those offered to the business-to-business (B2B) platforms of consumer companies and had previously threatened to stop sourcing if their demands were not met by December 31.

But most of them have extended this deadline as part of the ongoing negotiations. A branch of Hindustan Unilever (HUL) distributors in Maharashtra threatened to stop supplying products in phases from January 1, alleging that the country’s largest consumer goods company had not started any discussions on the issue of price parity with them.

However, ET spoke to a representative sample of HUL distributors and many of them said they would not join the boycott.

“We do not intend to join the boycott and have always engaged in dialogue with the company directly on such matters, even in the past,” said one of the distributors who asked not to be identified. “There is pressure on the margins, but higher volume can compensate in terms of profitability.”

A spokesperson for HUL said the company remains committed to ensuring that distributors get a fair return on their investments and improving their capabilities in their general business. “Our agreements with our distribution partners are ‘not exclusive’. Depending on the buying habits of buyers, channel structures and operating costs, the assortment offered could be different, ”the person said.

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