Hindustan Unilever-Distributor Dispute Resolved But Movement Against Colgate Continues

For the time being, the stalemate involving distributors and Hindustan Unilever (HUL) overpricing parity between traditional distributors and organised business-to-business (B2B) platforms has been settled. As reported, the distributors are now withdrawing their protest against HUL.

Late Tuesday (4 January), the All India Consumer Products Distributors Federation (AICPDF) said that it is resuming HUL product deliveries. AICPDF stated that it would assess the situation in three months.

Dhairyashil Patil, who is the chief of Distributor Federation, said: "From today, the movement against HUL stands postponed. The company's executives have told us they consider distributors as an important component of their channels and the company will take corrective action on the issue."

He also said that HUL has guaranteed that it will protect the interests of distribution channels and that distributors can inform the firm if something goes wrong. Meanwhile, an HUL spokesperson told Economic Times that the company will make every effort to resolve any individual issue with its distributors bilaterally to mutual satisfaction.

Distributors have been demanding the same margins from fast-moving consumer goods (FMCG) companies as new B2B, the emerging wholesaler and retailer platforms. They have also threatened to stop selling HUL and Colgate products in several states, including Gujarat and Rajasthan, beginning 4 January, after boycotting sales of select packs in Maharashtra from 1 January.

Earlier this week, Colgate said: "The company is not aware of any information in this regard (distributors decision to stall supply of Colgate MaxFresh range of products) which requires disclosure to exchanges. Further, there is no material impact of the news article (about distributors in Maharashtra will stop supplying Colgate India's products in phases) on the company. The company will ensure that supply of its products remains uninterrupted in the state."

FMCG businesses are allegedly selling products at lower costs to wholesalers and B2B channels like Reliance JioMart, Metro Cash and Carry and Udaan, according to distributors. In December last year, the AICPDF wrote letters requesting a level playing field to 24 FMCG businesses, including HUL, P&G, Dabur, Marico and Nestle. The push against Colgate Palmolive, however, is still going strong, according to Patil.

The trade body said this week, "The movement against Colgate is still going on and the intensity will be increased. The company still sticks to its obstinate attitude."