J & J Faces State Chemists Boycott
The Maharashtra State Chemists and Druggists Association has boycotted consumer products of Johnson & Johnson (J&J). The ban, which came into effect from October 1, 2001, is being implemented by approximately 300 stockist-members in Maharashtra.
The ban applies to all J&J's consumer products such as sanitary napkins, talcum powders and health care products. According to J S Shinde, president of the Maharashtra State Chemists and Druggists Association, "The trigger for the boycott has been the violation of the agreement signed by the company with our association in 1983. Their idea now is that any stockist must not earn more than 36 per cent as his return on investment and if he does, it must be given to the company."
All attempts to get a company response proved futile as official said only the managing director was authorised to comment and he was said to be out town. A fax to the company's sales department also did not elicit a response.
Under Operation 'Aakash' introduced in 1999, the company has given a fresh set of guidelines to the stockists who were approached on an individual basis to agree to the conditions. This has resulted in the dismissal of about 50-60 pharmaceutical stockists and about 30-40 consumer stockists across Maharashtra either because they refused to abide by the fresh guidelines or due to non-compliance with the terms, once accepted.
For example, the company had stipulated a minimum stock level of not more than 15 days in the earlier agreement which has been pushed up to almost four months in the last two years. "Another major issue has been the slashing of trade margins from the earlier agreed margin of 10 per cent to wholesalers to 5 per cent, and 14-20 per cent (margin) to retailers down to between 5-12 per cent which has been coupled with an increase in sale price by almost 200 per cent in the last 2 or 3 years," says Shinde. Besides the cash discount of 2.5 per cent is also subject to the company's discretion, according to Shinde.
While chemists and druggists in Tamil Nadu had already boycotted the company's products, their counterparts in Orissa, and in cities like Ahmedabad are also considering the ban.
Other trade associations such as the Federation of Retail Associations, and the Federation of Consumer Products Association of Maharashtra have supported the boycott.
This is not the first time that the MNC is facing this problem. Even in 1998 it had to face a similar problem while in the early 1990s after recurring protests from the trading community, J&J had not only restored margins but also reimbursed notional losses to the traders.
Shinde said depending on the company's response within the next 15 days, stockists in Maharashtra will consider pushing out their unsold stocks worth Rs 30-40 lakh into the neighbouring states. The popular brands of the Rs 600 crore Johnson & Johnson include Stayfree, Carefree, Band-Aid, Shower to Shower and Clean n Clear.