HUL's Maharashtra Distributors Call Off Boycott After Meeting With Executives

Distributors of India's largest consumer goods maker in Maharashtra have agreed to halt a boycott of its products over differential pricing after a meeting with its executives late on Monday.

“From today the movement against Hindustan Unilever Ltd. is withdrawn till further notice by the organisation,” the All India Consumer Products Distributors Federation said in a statement.

The decision was taken after the company's executives met a six-member committee, including Dhairyashil Patil, the federation's president; and PM Ganeshraam, founder and state president of Tamil Nadu Consumer Products Distributors Association, among others. The Maharashtra lobby had earlier said it will stop supplying HUL's Kissan range of products from Jan. 1.

“They [HUL] assured us that they consider their distributors as an important component of the chain of their distribution system and said the company will take corrective action on the issue [of differential pricing],” the statement said.

However, the distributors will keep a close eye for the next three months, Ganeshraam said. “If the situation persists, we'll initiate fresh movement.”

But the company, in an earlier response to BloombergQuint, had said that "based on shopper buying habits, channel structures and cost of operations, the assortment offered could be different".

General trade, or supply of staples to shampoos through traditional distributors, continues to dominate the country's retail sector with almost 85% share. However, consumer goods makers are enhancing their digital capabilities and strengthening online reach. HUL services 15% of its demand digitally.

“HUL dominates most categories and has a strong consumer pull,” said Abnessh Roy, executive director at Edelweiss Financial Services. He expects fast-moving consumer goods companies to offer different stock-keeping units to different channels to address the issue of price parity.

While the distributors have decided to resume supply of HUL products in Maharashtra, they will continue to protest against Colgate. “The movement against Colgate is going on and the intensity of the movement will be increased in the same way if our demands aren't heard,” AICPDF said.