Some Maharashtra distributors to stop stocking of HUL's Taj Mahal tea

AICPDF has also asked for a provision in the software system to prevent billing to outlets without valid FSSAI licenses

Some distributors in Maharashtra have decided to stop stocking Taj Mahal Tea of Hindustan Unilever (HUL) from Friday to protest the fast-moving consumer goods (FMCG) major’s new margin structure.

A press note by the All India Consumer Products Distributors Federation (AICPDF) said the Maharashtra Consumer Products Distributors Federation (MSCPDF) has asked the company that the basic margin be fixed at 5 per cent. The company reduced it to 3.3 per cent from 3.9 per cent last month in over 100 cities.

The distributors in the state also plan to stop stocking up on Kissan products from January 25 followed by Rin from February 10. This proposed action of not stocking these three products will continue till February 25.

“HUL has a longstanding and one-to-one relationship with its distributor partners based on trust and mutual interest. Our distributors have overwhelmingly conveyed to us that they would continue to meet the needs of our shoppers and consumers in an uninterrupted manner,” the company said in response to a query from Business Standard.

AICPDF has also asked for a provision in the software system to prevent billing to outlets without valid FSSAI licences. The distributors’ federation press note also warned that if the company did not respond, it would go on a countrywide non-cooperation movement.

MARGIN PRESSURE

• HUL cut fixed margin earned by distributors on sales from 3.9% to 3.3%
• It increased the variable margin by 1-1.3%
• FMCG firms typically give fixed margins of 4-6%, while variable margins depend on performance parameters