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Tussle between traders, FMCG firms worsens over differential pricing

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Federation of All India Distributors Association steps in to lend support

An ongoing stir involving fast-moving consumer goods (FMCG) companies and distributors in Gujarat over differential product pricing and low margins is threatening to go national. This comes as the Federation of All India Distributors Association (FAIDA), which comprises 24 member state bodies, steps in to lend support to the agitation, which has seen the Gujarat-based distributors boycott products of a few companies for the past few days.

Companies whose products have not been picked up for distribution in the state under a “non-cooperation movement” include Marico, Dabur, Emami, Britannia, Reckitt Benckiser (RB), and Godrej Consumer Products. These firms, distributors allege, have been supplying directly to modern trade and e-tailers, bypassing them.

“For years, the authorised local distributor is the channel through which companies have been supplying to all retailers including kiranas, paan shops, and modern trade. However, as organised retail and e-commerce have grown in the past few years, companies now supply to them directly at lower prices. This impacts our business. Besides, the inventory we get from companies is priced higher and margins are lower,” said Arun Parikh, chairman, Federation of Gujarat FMCG Distributors Association, which is leading the stir.

The price differential between modern trade and traditional trade in some categories is as high as 25-35 per cent, driving traffic to the former, added Parikh. Read more..
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