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FMCG distributors seek level playing field, threaten firms of non-cooperation

All India Consumer Products Distributors Federation or AICPDF — an industry body that represents dealers and distributors of fast-moving consumer goods companies — has written an open letter to FMCG companies highlighting issues faced by offline distributors on account of business-to-business companies such as Jiomart, Walmart, Metro Cash and Carry, Booker, Elasticrun and Udaan that “indulge unethical predatory pricing” and “potentially destroying the traditional distribution network in the country”.

In an open letter to companies such as Hindustan Unilever Ltd., Marico, Dabur India, ITC Ltd., Britannia Industries, Godrej Consumer Products Ltd., Nestle India, etc the industry body has called for a non-cooperation movement from 1 January against FMCG companies if their needs are not addressed.

The federation that represents over 4,00,000 distributors and stockiest has placed several demands in front of FMCG companies asking for equal treatment of all those engaged in the distribution of FMCG goods as well as seeking price parity.

In its letter, AICPDF has sought one pricing and scheme pan-India—that it said will eliminate cross border flow of goods that occurs when goods are being sold at cheaper rates in different markets. It has also asked FMCG companies to “rework margins” to take into account any incremental costs borne on account of inflation.

“We are authorized channel partners of your company in our designated area. We have earned reputation and goodwill amongst our retailers by giving them good service for many years. We understand that Jiomart and other B2B companies are offering them the same products of your company at a lesser price than what we offer them and this is adversely affecting our reputation and goodwill. Hence, our demand is that we also receive those products at prices at which we also can offer the same prices as Jiomart and B2B companies,” it said.

Distributors of large fast-moving consumer goods companies have for years dominated how products reach retailers and consumers. Lately, they have been at loggerheads with consumer products companies as new-age companies offer better prices and technology backbone to retailers potentially threatening their trade.

AICPDF has urged FMCG companies to ensure that no preferential treatment is given to any enterprise irrespective of its volumes. If a company is unable to provide such pricing parity, the association said it will “drop” the products sold by Jiomart and B2B companies from its portfolio.

In its letter seeking favourable terms from companies—members of AICPDF said they will sale of new products till they get a guarantee from the company that such products will not be made available on Jiomart and other business to business companies in the future.

It has appealed to companies to call for a meeting with their respective distributors as well as representatives of AICPDF to discuss and “sort out the matter”.

Moreover, it has sought tighter monitoring on the flow of goods seeking the formation of a draft committee as well as setting up a regulatory body with various industry stakeholders to address future issues. LiveMint

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