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FMCG distributors issue ‘nationwide ultimatum’ over shrinking margins
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Wednesday, 10 June, 2026, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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India’s massive Fast-Moving Consumer Goods (FMCG) supply chain may face an unprecedented crisis, as the All India Consumer Products Distributors Federation (AICPDF) has issued a nationwide warning to major consumer goods companies, demanding an urgent overhaul of distributor margin structures or face potential protests in August.
Representing over 4.5 lakh distributors across 25 states servicing 1.3 crore retail outlets, the federation has set a strict deadline of July 30, 2026, for manufacturers to take corrective action.
The AICPDF highlighted an FMCG giant as a prime example of this industry-wide strain. In several territories, this FMCG giant’s distributors operate on basic margins of just 3.5%, a figure the federation calls entirely unviable against soaring operational costs.
Spiraling expenses in diesel, warehousing, labour compliance, and technology are heavily eroding profitability. The squeeze has already driven nearly 30% of distribution territories into operational exits, forcing even multi-generational partners of up to 40 years out of the system.
"This is not about seeking higher profitability, it is about ensuring the survival of the distribution network," said Dhairyashil Patil, national president of AICPDF.
Federation chairman Dr. P. M. Ganeshram added that the current 3.5% to 5% industry margins are relics of an outdated economic era that fail to reflect today's realities of inflation and increased service demands.
The federation’s core demands include revised margins, fuel and logistics support, and an end to aggressive inventory loading.
The federation warned that a weakened distribution backbone will inevitably disrupt nationwide product availability and rural market penetration, and urged FMCG giants to engage in constructive dialogue before the July deadline triggers widespread supply disruptions.
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