FMCG companies roll out the red carpet for kiranas amid quick commerce boom
Leading companies like
ITC
,
Nestle
,
Coca-Cola
, Tata Consumer,
Dabur
and Parle are making fresh moves to improve trade and relationships with
general trade distributors
, such as supplying more premium products and offering higher margins amid rapid growth but increased scrutiny on quick commerce.
This is a reversal from last year, when companies had slashed stocking in general trade amid a protracted slowdown which saw quick-commerce companies gain share for not just impulse categories such as soft drinks and snacks, but also large staples packs of 5 kg and 10 kg.
"For general trade, we have made a wider portfolio of premium packs," Sandeep Sule, divisional chief executive, trade marketing and distribution at
ITC
, which makes and sells Engage perfume and Master Chef ready-to-cook and frozen foods, said. "We have reconfigured our supply chain and distribution infrastructure for wider availability of premium packs in general trade and created value offers for premium general trade outlets with merchandising support," Sule added.
by Taboola
by Taboola
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India has 13 million
kirana stores
, which continue to contribute over 90% to overall sales of makers of grocery products, though sales contribution from quick-commerce platforms such as Blinkt, Zepto, Instamart and BB Now have been growing in high double digits. Recent months have seen general trade distributors highlighting "differences" with grocery makers, alleging that the latter "have been favouring quick commerce over traditional trade with deep discounts and differentiated margins."
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Last week, Dabur India chief executive Mohit Malhotra met general trade distributors to commit fresh investments to neighbourhood stores. "We are now investing in new tools and programmes to empower general trade stockists; these range from predictive analytics for demand planning to simplified onboarding and claims processing systems," he said.
Coca-Cola is escalating its "Coke buddy platform," which allows retailers to self-order stocks, to make pricing, promotions and delivery tracking transparent with general trade, the company said. "Coca-Cola is empowering general trade via our super power retailer programme. Now, close to one million retailers in India and Southwest Asia are ordering on this platform," a spokesperson for the beverages maker said.
On June 16, the All India Consumer Products Distributors Federation (AICPDF) wrote an open letter to
FMCG companies
alleging "lack of binding agreements with distributors and vendors." The entity, which represents over 4.5 lakh distributors and 13 million kirana retailers, asked companies for "a single, channel-agnostic market operating price" across general trade, quick commerce or modern trade.
"We follow a GT-first (General Trade-first) policy. Among our latest initiatives is to escalate replenishment of stocks with trade partners, so their returns on investment are optimised, and their capital is put to best use," said Mayank Shah, vice president of Parle Products.
Faster stocking cycles reduce storage costs, directly improving return on investment.
A spokesperson for packaged foods maker Nestle India said the company "is actively enhancing its direct coverage and further deepening its relationships, as traditional trade remains the cornerstone of its business."
Sunil D'Souza, MD at Tata Consumer Products, said in a recent earnings call that it has "increased retail margins" on some of its brands in general trade to build momentum back under the business.
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