FMCG distributors demanding restoration of old margin structures from the leading maker HUL on Thursday said they would boycott its products in Maharashtra, starting with Taj Mahal Tea.
The distributors further said that if the company does not pay attention to their demand, then they will boycott the Kissan brand and leading detergent brand Rin along with Taj Mahal tea brand going ahead.
HUL’s Margin Adjustment
HUL, the owner of brands like Lux, Lifebuoy, Surf Excel, Rin, Pond’s, and Dove, has decreased the fixed margin by 60 basis points while raising the variable margins for its distributors by 100 to 130 basis points.
The distributors are demanding a minimum basic margin of 5 percent. They endorse incentive parameters but insist that these should not encroach upon the distributor’s margin.
The All India Consumer Products Distributors Federation (AICPDF), a collective body representing distributors, has raised concerns about the updated margin structure.
AICPDF on Thursday shared a statement from the Maharashtra Consumer Products Distributors Federation (MSCPDF), in which they have started non-cooperation against HUL from January 11, by boycotting its products starting with Taj Mahal Tea.
MSCPDF plans to keep the Taj Mahal Tea brand as “Inactive” till January 25, which “should be kept in Frozen so that it does not get booked and billed.” However, if “the company does not pay attention to our legitimate demand, then Kissan brand along with Taj Mahal tea will be Inactive / Frozen from January 25 to February 10,” MSCPDF said.
MSCPDF further said if no solution is found even after this, then products under HUL’s leading detergent brand “Rin along with Taj Mahal and Kissan brands will be Inactive from February 10 to February 25.” An E-mail sent to HUL remained unanswered by the time of filing of the story.
The federation further said from March 1, a nationwide movement will be organized in all the states along with a dharna with 1,000 distributors in front of HUL’s Mumbai-based head office.
“This movement will start from Maharashtra and spread to different parts of the country week after week,” AICPDF statement said, adding by February, more than 1,500 to 2,000 distributors from other parts of India are expected to participate.
Typically, FMCG companies offer two types of incentives: fixed margins and variable margins. The majority of these companies provide fixed margins ranging from 450 to 600 basis points, in addition to variable margins determined by factors like performance.
AICPDF claims to represent over 4 lakh distributors and the stockist pan India.
Two years before also AICPDF was in loggerheads with HUL over margin parity between business-to-business platforms and cash-and-carry players. It had called for a boycott of HUL products, which was later called off on January 4, 2022.
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