FMCG Distributors Across India Threaten To Halt Stocking Goods On Discounting Disparity

Distributors of consumer goods across the country would halt stocking of their merchandise from Dec. 15 if a resolution isn’t reached on uniform product pricing across sales channels, according to a person privy to the development.

The All India Consumer Goods Distributors Association would also write to Prime Minister Narendra Modi and both the houses of the Parliament, seeking action on deep discounting by manufacturers, the person, who is a member of the association, told BloombergQuint on the condition of anonymity.

The issue and the steps needed to address it were discussed at a meeting organised by the apex body in Goa on Nov. 9-10, the person said, adding distributors would also write to consumer goods makers, recommending them to maintain uniform pricing across distribution channels, including e-commerce.

That comes as bulk dealers of consumer goods in Gujarat last week stopped stocking products of six companies as the firms have begun to supply directly to hypermarkets and supermarkets besides offering them higher discounts.

The traditional distribution channel through which consumer goods are distributed to mom-and-pop stores comprise nearly 90 percent of FMCG sales, while the rest is through hypermarkets, supermarkets and e-commerce.

But with customers switching to modern retail outlets and e-commerce platforms, which provide lucrative offers, distributors are hurting. That has aggravated as Indians cut back spending on biscuits and shampoos to cars amid stagnated wage growth and fall in rural incomes, leading to bloated inventories of distributors and forcing 5,000 suppliers across the country out of business in the last six months.