India’s fast moving consumer goods (FMCG) distributors are feeling the pinch of the consumption slowdown. The Federation of All India Distributors Associations (Faida) has written to 6-7 FMCG companies on issues like deep discounting as well as price discrimination.
The association claims that FMCG companies are offering better margins and incentives to modern trade. This has led to unhealthy trade systems playing out, say distributors. “The margin differential is in the range of 15-20 percent in many cases and this is unacceptable,” said an FMCG distributor who did not want to be identified.
Issues like deep discounting, price discrimination, predatory pricing and margin differentials have been a cause of concern in the online or e-commerce space as well. This clash has now moved to the offline space and distributors are blaming FMCG companies for giving them stepmotherly treatment.
Sources say that the association, representing 4.5 lakh distributors, has written to companies such as Dabur, Britannia, ITC, Godrej Consumer and Mondelez about this deep discounting and price discrimination.
“All direct supply to malls or modern trade should be stopped immediately and should be routed through standard distributor channel as it was or as earlier and according to the agreement entered,” said Faida in the letter.
Uniform margins sought
The association is seeking uniform retailer, mall margins and trader schemes across the board. “A large number of distributors are affected by indirect benefits given to malls on large purchase orders,” said an FMCG distributor. “There is need to maintain a fair level price play in both the online as well as offline space,” he added.
The association has given FMCG companies seven days to respond to the letter. “Your reply will be highly appreciated and will be considered as a positive notion from your end to engage into a positive dialogue, failing which, we will have no other alternative but to proceed further within the applicable measures to bring in force our demands and humble requests,” said Faida in the letter.
The distributors say that they may consider discontinuing the sale of products of companies that do not cooperate with them.
If FMCG distributors are fighting against deep discounting and price discrimination, online food ordering firm Zomato and National Restaurant Association of India (NRAI) are at loggerheads over Zomato Gold, a premium membership plan that offers free food and drink.
During the recent #Logout campaign, restaurants complained about the deep discounting offered through Zomato Gold which was disrupting the industry.