From HUL to Dabur India, consumer firms offer incentives to distributors

This comes at a time when the market is pushing for growth in urban areas, which has been impacted, while rural sales have been on an upward swing for the past few months

Consumer companies are giving incentives to supply chains at a time when there is a push for expansion in urban markets, which are affected, while rural sales have been up for the past few months.

 

Firms like Hindustan Unilever (HUL) are offering credit to supply chains while Dabur India is giving higher target-based incentives.

 

According to distributors Business Standard spoke to, in the March quarter HUL offered seven days’ credit to them to pay for the stocks they purchased. The company had started offering credit to supply chains a year ago, something it never did before.

 

It also offered a 0.1 per cent incentive on completing primary targets (which is buying stocks from the company) for March.

 

A distributor said: “We’ve never been offered an incentive before for meeting primary sales targets.”

 

Another distributor said this cushion had never been given to distributors.

 

Dabur typically incentivises its supply chains for meeting primary and secondary targets. Such incentives are given once or twice a year for a month or two months.

 

However, for April-June, distributors will have an incentive of 0.85 per cent on meeting the highest slab of the target.

 

The distributor has to meet the target every month of the quarter to get a better payout.

 

“The incentive is given if the distributor meets 110 per cent of its primary sales target,” a distributor said.

 

Godrej Consumer Products is offering retailers higher margins, almost 10 per cent, on its room freshener Aer.

 

Dabur India and Godrej Consumer Products did not respond to Business Standard’s email.

 

HUL did not respond to Business Standard’s email and cited a closed period ahead of its earnings, which are slated to be released on Thursday.

 

In its pre-quarterly update ahead of its January-March earnings, Dabur said rural markets continued to remain resilient and grow ahead of urban.

 

It also said that in terms of channels, organised trade, including modern trade, ecommerce and quick commerce, maintained their growth momentum while general trade stayed pressured. It also said volumes in fast-moving consumer goods continued to be subdued during the quarter ended March.

 

Godrej Consumer Products pointed out in its pre-quarterly update that its management’s focus remained on reviving underlying volumes growth in the quarter.   

Added benefits

 

> Dabur India: Offering higher target-based incentives

> HUL: Providing credit to supply chain distributors

> Godrej Consumer Products: Offering higher margins to the retailer on its room freshener Aer