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Reckitt takes steps to calm pricing row in India

Mark White by Mark White
January 6, 2022
in Procurement
0

A worker inspects boxes of Reckitt’s Dettol handwash at a distributors warehouse before loading them onto a truck for delivery to retailers in Mumbai, India, September 17, 2021. REUTERS/Francis Mascarenhas

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NEW DELHI, Jan 5 (Reuters) – British consumer giant Reckitt Benckiser sought to allay concerns from its army of sales agents in India about unfair pricing, saying it had taken steps to ensure a level playing field for distributors, a letter seen by Reuters showed.

The assurance followed a Reuters story in November that revealed sales agents of companies including Reckitt, Unilever (ULVR.L) and Colgate were angry that mom-and-pop stores – known as kiranas in India – increasingly ordered from Indian retailer Reliance’s mobile app because they could get lower prices.

In a letter dated Dec. 20 to a key trade group of 400,000 consumer goods sales agents, Reckitt said it had taken steps to ensure “equitable play” for all its business partners as it seeks to resolve their concerns.

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There are hundreds of thousands of consumer goods distributors who go store-to-store in India to take orders from kirana outlets and they are key to the success of companies like Reckitt in trying to reach the population of 1.3 billion.

The agents said the companies risked supply disruptions if they did not ensure pricing parity for all distributors.

“We have been extremely careful and discourage any unsustainable businesses with alternate distribution channel partners,” Reckitt said in the letter to the All India Consumer Products Distributors Federation (AICPDF).

“Any violation is immediately flagged off and stopped,” it added, without naming Reliance or any other big distributor.

Reckitt – the maker of popular brands like Dettol and Durex – did not respond to a request for comment.

AICPDF’s President Dhairyashil Patil said it is “going by the company’s words” for now and hopes Reckitt will be able to ensure a level playing field.

Reliance, headed by billionaire Mukesh Ambani, has longstanding relationships with consumer product firms like Reckitt as it also runs 1,100 supermarkets in the country.

Jefferies last year estimated kiranas will “steadily increase the share of procurement” from Reliance “at the cost of traditional distributors”. Such sales for Reliance could mushroom to $10.4 billion by 2025 from just $200 million in 2021-22, Jefferies estimates.

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Reporting by Aditya Kalra in New Delhi;Editing by Elaine Hardcastle

Our Standards: The Thomson Reuters Trust Principles.

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Mark White

Mark White

Mark White is the editor of the ProcurementNation, a Media Outlet covering supply chain and logistics issues. He joined The New York Times in 2007 as an commodities reporter, and most recently served as foreign-exchange editor in New York.

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