Spooked Distributors Protest HUL's Tie-Up With JioMart - Exclusive

Billionaire Mukesh Ambani’s plan to control the supply chain of India's $854-billion household retail sector is facing a pushback.In April, JioMart partnered with Hindustan Unilever Ltd. to supply products to mom-and-pop stores, according to a company letter. The agreement allows JioMart to sell everything that India's biggest consumer goods company makes to kirana stores, and hotels, restaurants and caterers across the country.The maker of Dove shampoo currently routes products through about 3,500 distributors across India. Its tie-up with Reliance Retail Ltd. poses a serious threat to their business.The All India Consumer Products Distributors Federation has written to HUL, opposing the partnership. According to its Aug. 21 letter, the lobby asked HUL to reconsider the pact with JioMart.BloombergQuint has reviewed both the letters..Ambani-Bezos Fight Threatens The Backbone Of India’s Retail Trade.General trade—as distribution through bulk dealers and stockists is called—dominates India's retail supply chain with nearly 90% share. It's a conduit for staples to shampoos from the factory gate to millions of small stores in every corner of Asia’s third-largest economy. Now, the channel faces a real threat.JioMart plans to take orders online and fulfill through kirana stores across India. It's also luring these small outlets with incentives to buy inventory from it. Reliance Retail offers 3-4% higher margins, according to distributors BloombergQuint spoke with. It already supplies to shops in 100 cities, and is expanding aggressively.Others like Udaan, an e-commerce platform for businesses to buy goods in bulk, and Tata Group-owned BigBasket's wholesale unit, too, are formalising business-to-business retail. The latest pact between Reliance and HUL threatens to completely exclude distributors, at least the smaller ones, from the equation.The distributors are considering a daylong protest against the tie-up, according to Dhairyashil Patil, president at the lobby. And they have also written to Piyush Goyal, minister of commerce and industry, consumer affairs, and food & public distribution and textiles, said Patil. Emailed queries to Goyal’s office remained unanswered..Reliance Retail will put distributors out of business as JioMart takes over the distribution of HUL, according to the letter cited earlier. It will create a conflict as both parties supply to the same set of mom-and-pop stores and could put them out of business as they have invested in putting an infrastructure in place, it said.In an emailed response, HUL said, “While new channels continue to evolve, general trade continues to be the largest channel and our distributors (redistribution stockists) continue to be our valued partners.”The country’s largest consumer goods maker said it has taken several actions to strengthen general trade, including technology to place orders through its B2B app. During the pandemic, HUL said, it has 'specially tailored programmes for its distributors to help them hone their business skills and be future-ready'.Reliance Industries Ltd., the parent of Reliance Retail, said it's working 'towards enriching and empowering kiranas and merchants with our end-to-end digital and physical distribution stack'. This will deliver 'significant new value by linking producers, traders, small merchants, consumer brands and consumers'..Distributors have also urged other consumer goods makers to not supply products to large business-to-business suppliers, reiterating that it will put them out of business, according to another letter sent to FMCG companies.Nestle India Ltd., in an emailed response, said, “We are in receipt of the letter and will be going through its content.'Mondelez India Pvt. Ltd., Britannia Industries Ltd. Godrej Consumer Products Ltd., Marico Ltd. and ITC Ltd. have yet to respond to emailed queries..Mukesh Ambani Is Going Green But Still Getting Rich Off Oil

Spooked Distributors Protest HUL's Tie-Up With JioMart - Exclusive

Distributors consumer goods are pushing back against Ambani’s plan to corner a bigger share in retail supply chain.

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