Distributors of Fast Moving Consumer Goods in Kerala have announced that they will be staging a one-day token strike on Thursday to protest against the ‘distributor hostile initiatives’ of Tata Consumer Products. On this day, the All Kerala Distributors Association said that the distribution of all FMCG products in the state will be suspended, and that roughly 10,000 delivery vehicles will remain off the road.
This strike is being supported by the 14 district committees of the Kerala Vyapari Vyavsai Ekopana Samithi. In a statement, AKDA said it will be arranging dharnas at 900 “strategic points” in the state.
AKDA’s protest pertains to the merger of Tata Chemicals (TCPL) and Tata Global Beverages into Tata Consumer, when in August 2020 it began the process of changing its distribution model. This implementation of these changes is currently underway in Kerala. AKDA said that this move has led to distributors being “confronted with irreparable losses and inexplicable operational burdens.”
In August 2020, TCPL said it had reviewed its sales and distribution structures and realised it was critical to work with the stockist and dealer network directly “to increase our distribution footprint and in-store execution in the market.”
AKDA said that TCPL unilaterally decided to withdraw facilities that were previously enjoyed by the distributors in the state, such as 15 days credit facility, capping three times the value of their security deposit, cash discount of 0.5% for advance payment, etc.
“On top of this TCPL demoted around 20 distributors to sub-stockists and reduced their gross margin of profit by 0.8%,” AKDA said.
It also blamed a handful of officers in the marketing team of TCPL for these “misdeeds”, which, it said, “can cast aspersions on the impressive and impeccable image and esteem TATA brands hold among the citizens of our country.”
As a result of these changes, AKDA alleges that 25 distributors were terminated by the company.
The association said that distributors have been agitating against this since April 1 to reinstate distributors who were terminated.
“Instead adhering to the gentlemanly etiquette of coming forward for a dialogue with the distributors or their Association, AKDA, despite many attempts to reach out to them, TCPL Officers were audacious in terminating another 42 front line warriors among the distributors, taking the tally to 67 casualties,” AKDA said in a statement.
In its response, a spokesperson for Tata Consumer Products said that the company sought to rework its existing distribution network across the country, including Kerala, as part of its integration into one common system.
“These changes commenced in September 2020 and have now been completed across the country, except in Kerala where this is currently underway. The changes proposed are in line with the way most FMCG companies operate and will have the benefit of a stronger reach and distribution as well as the creation of more job opportunities overall in Kerala,” it said in a statement.
Tata Consumer said it has held discussions with almost all distutores in Kerala to agree on a resolution. “These revised terms were well appreciated by most of the distributors and include providing a larger business through the integrated TCPL portfolio, support for improving infrastructure, support for digitisation of systems, faster settlement of claims, 100% settlement of pending claims as well as the provision of incentives based on performance,” it said.
It alleged that a minority of distributors are “trying to create a false picture” that Tata Consumer has been unfair. “They have insisted that they would continue to operate as before, in a manner that was not tenable as terms of trade need to be mutually acceptable for parties to engage in business,” it said. It added that all old distributors were given the right of first refusal to continue, and only those distributors who did not agree to the revised terms were served termination notices, and alternatives appointed.