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FMCG giants to curb sales to organised wholesalers to support kirana stores

20 Feb 2024

80% of the FMCG sales are controlled by kirana stores in India. Amul, Dabur, Britannia, and Parle plan to reduce sales to organised wholesalers to avoid price wars with traditional distributors.

FMCG giants in India plan to reduce their sales to organised wholesalers like Reliance Cash and Carry, Udaan, and Flipkart Wholesale. Conventional kirana stores in India control 80% of the wholesale distribution. Organised retail and wholesale companies own 5% of the market share but have the advantage of scale and can offer more leverage over supplies and prices.

Earlier, the FMCG companies hoped to reach the kirana stores through organised wholesalers, but it didn’t happen. Troubled by the threat of deep discounts from established wholesalers, the kirana stores had earlier threatened to stop product supply from these companies.

Supplying to traditional distributors costs FMCG companies 13-14% of the sales and nearly half in the case of organised wholesalers. Consumer goods corporations rely on a wholesale network to reach the 12 million kirana stores nationwide. They still plan to leverage organised distributors but limit their participation below 10%.

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