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Distribution woes follow for Colgate after HUL

News: The All India Consumer Products Distributors Federation (AICPDF), which has over 450,000 members, had decided to stop supplying HUL & Colgate products to retailers in Maharashtra. For Colgate initially the maxfresh & vedshakti products will be taken off shelf, followed by the toothbrushes in mid Jan, & from 1st Feb supply for all colgate products will be stopped by distributors. HUL's product's supply has already been stopped in Maharashtra from 1st Jan by these distributors owing to disparity in distribution margins.

Views: A large part of distributors are still supplying the goods to retails & not following the directives of association. Moreover, the company has enhanced its digital capabilities for direct supply. The impact could be somewhat subdued given expansion into alternative channels of distribution. But since the traditional channel remains an important & major channel for these FMCG companies, they would want to iron out these issues soon.We believer HUL would have increased its trade inventories from Usual 11 days to address the supply crunch possibilities.

Impact: Neutral