Fast Moving Consumer Goods (FMCG) distributors in Maharashtra are considering boycotting Hindustan Unilever Limited (HUL) products, starting with Taj Mahal Tea, as they demand the restoration of the previous margin structures. The distributors, under the umbrella organization All India Consumer Products Distributors Federation (AICPDF), are dissatisfied with the new margin structure implemented by HUL.
HUL, the owner of popular brands such as Lux, Lifebuoy, Surf Excel, Rin, Pond’s, and Dove, has increased variable margins for distributors by 100 to 130 basis points while reducing the fixed margin by 60 basis points. The distributors are advocating for a minimum basic margin of five percent and express concerns that the new incentive parameters impact their margins negatively.
The Maharashtra Consumer Products Distributors Federation (MSCPDF) released a statement outlining their plan of non-cooperation against HUL. According to MSCPDF, the boycott began on January 11 with Taj Mahal Tea, which will remain inactive until January 25. If their demands are not addressed by then, the boycott will extend to the Kissan brand and Taj Mahal tea from January 25 to February 10.
Should HUL fail to respond even after this period, products under the Rin, Taj Mahal, and Kissan brands will be inactive from February 10 to February 25. The federation further warned of a national movement starting on March 1, with a dharna involving 1,000 distributors in front of HUL’s Mumbai headquarters. The movement will commence in Maharashtra and then spread nationwide, with an estimated participation of 1,500 to 2,000 distributors from other regions by February.
The conflict between AICPDF and HUL has been ongoing for the past two years, revolving around margin parity issues. AICPDF had previously called for a boycott of HUL products on January 4, 2022, but the boycott was later called off. The disagreement underscores the complexities and challenges in maintaining parity between cash-and-carry players and business-to-business platforms within the FMCG sector.