FMCG majors reconnect with kiranas as quick-commerce squeeze deepens

ITC, Nestle, Tata, Dabur and Parle roll out new trade incentives to mend kirana ties and regain market share lost to fast-growing quick-commerce platforms

India’s leading fast-moving consumer goods (FMCG) firms, including ITC, Nestlé, Coca-Cola, Tata Consumer Products, Dabur, Reliance and Parle, are pivoting back to general trade after a year dominated by partnerships with quick-commerce platforms like Blinkit, Zepto, Instamart and BB Now.

 

According to a report in The Economic Times, these companies are making fresh efforts to re-engage kirana stores with broader product assortments, improved supply chains, and increased retail margins. The shift follows backlash from distributors over alleged price disparities favouring digital players.

 

ITC, for example, has recalibrated its distribution network to expand premium product access for kiranas, while also offering value-driven incentives tailored to higher-end stores.

   

General trade still dominant despite digital surge

Quick-commerce platforms may be on the rise, but general trade continues to dominate the Indian grocery landscape. Over 13 million kirana stores account for more than 90 per cent of FMCG sales. However, distributor relations have frayed in recent quarters due to accusations of preferential pricing and margin structures extended to e-grocery apps.

 

On 16 June, the All India Consumer Products Distributors Federation (AICPDF), which represents over 450,000 members, demanded price parity across channels. The federation called for uniform market operating prices and criticised the lack of formal vendor agreements between FMCG companies and their distributors.

 

Traditional retailers face mounting pressure

The friction has intensified over the past year. In October 2024, AICPDF claimed that quick-commerce growth had led to the closure of nearly 200,000 kiranas. General trade also witnessed a subdued Diwali season, with monthly sales reportedly falling 25–30 per cent between July and October 2024.

 

The Federation of Retailer Association of India (FRAI), which represents around eight million small retailers, raised similar concerns in December 2024. It urged both companies and regulators to support kiranas with better access to digital tools and infrastructure, warning that the traditional retail model could collapse without intervention.

 

Quick commerce rapidly expands footprint

While general trade grapples with uncertainty, quick commerce has seen explosive growth. A May 2025 report by Bain & Company and Flipkart estimated that these platforms now account for more than two-thirds of all e-grocery orders, with the market valued at $6–7 billion in 2023.

 

Platforms such as Blinkit, Zepto, Instamart and BB Now have expanded beyond snacks and daily essentials to bulk groceries and electronics. They claimed roughly 10 per cent of all e-grocery spending in 2024 and are projected to grow at over 40 per cent annually through 2030. Flipkart and Amazon are also exploring entries into this space.

 

While consumers are drawn to instant deliveries and steep discounts, the shift has disrupted long-standing relationships between FMCG brands and kiranas.

 

New incentives to repair trade ties

In response, FMCG players are taking steps to win back kirana loyalty. Dabur has introduced predictive analytics tools to help distributors forecast demand and manage inventory. Coca-Cola is expanding its digital self-ordering platform to improve transparency on pricing and deliveries.

 

Parle has shortened replenishment cycles to ease cash flow and cut warehousing costs. Nestlé is expanding its direct retail coverage, while Tata Consumer Products has raised trade margins on select brands to regain lost share in general trade.

 

Reliance Consumer Products is offering higher margins and broader stock availability to its kirana partners.

 

While quick-commerce platforms remain key to urban growth strategies, FMCG firms now appear committed to strengthening their traditional retail foundations, recognising that long-term resilience requires balancing both digital and kirana networks.