FMCG firm Hindustan Unilever Limited (HUL)’s distributors have threatened a mass boycott after the company placed an advertisement for new distributors for its brands in all major cities in Madhya Pradesh. A PTI report said that the existing distributors of HUL fear losing up to half of their investments in retail trade if new distributors are appointed. The FMCG giant maintained that it is not removing any of its current distributors and it ‘values relationships’ with them. HUL which owns brands such as Lux, Lifebuoy, Surf Excel, Rin, and many more, has invited people who can invest up to Rs 1-3 crore and can arrange a godown with the required infrastructure.
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In a statement, the All India Consumer Products Distributors Federation (AICPDF) said that HUL distributors are in ‘sudden panic’ and are viewing this move as ‘immature and a betrayal’. “Being the market leaders in the FMCG sector, HUL distribution business warrants crores of investments particularly in extending credit facilities to retail traders for sustaining and growing HUL business is at risk,” it said. “The panic situation is viewed as an immature and betrayal of HUL to its distributors fraternity in total by the business fraternity and AICPDF will stand by the HUL distributors across the MP state,” it added. Criticising this move, AICPDF said that it has resulted in a loss of confidence across the FMCG distribution system in the state. Last year, the federation called for a boycott of various HUL products owing to the issue of the price disparity between business-to-business retailers and offline distributors. However, it was called off in January after talks with the company.
However, issuing a statement, HUL said, “The advertisement relates to expanding our work with general trade distributors and is not about removing our current distributors.” A company spokesperson said: “We believe the prospects for general trade business are bright in the region and are looking to partner with distributors to leverage opportunities. We conduct our business fairly and transparently, and our associations with our distributors are bilateral. We value these relationships and will continue to engage with them directly.”