Colgate Distributors in Maharashtra Boycott Brand Over GST and Discount Issues

In a significant development that could disrupt the availability of Colgate products across Maharashtra, distributors have announced a boycott starting May 12, 2025. The All India Consumer Products Distributors Federation (AICPDF), representing over 4 lakh distributors and stockists across India, cited unresolved grievances related to GST credit notes and steep discounts offered to quick commerce channels as the primary reasons for this drastic step. This move comes amid growing tensions between traditional distribution networks and the rising influence of online platforms, threatening the livelihoods of local distributors.

The Boycott Announcement

On May 7, 2025, the AICPDF declared that distributors in Maharashtra would suspend all purchases of Colgate products starting May 12. This decision follows months of frustration and unresolved issues that have severely impacted the distributors’ businesses. The boycott is not just a protest but a desperate measure to address what the AICPDF describes as an “existential threat” to the traditional trade network (Business Standard).

Reasons for the Boycott

The boycott stems from two major issues:

1. GST Credit Notes Issue
   Distributors have been receiving trade credit notes from Colgate without the corresponding GST being applied. This has led to showcause notices from tax authorities, putting distributors at risk of penalties and legal complications. The lack of clarity and resolution on this matter has left them feeling unsupported and vulnerable.
2. Deep Discounts on Quick Commerce Platforms
   Colgate has been aggressively pushing its products onto quick commerce platforms like Blinkit, Zepto, and Instamart, offering discounts of 50-60% off the Maximum Retail Price (MRP). While this strategy may boost online sales, it has devastated traditional distributors. Consumers, drawn to the lower prices online, are bypassing local stores, leading to stagnant inventory and falling sales volumes. Field Sales Executives (FSEs) are also demotivated, as their targets have become unattainable due to the shift in consumer behavior (The Hindu BusinessLine).

Impact on Distributors

The boycott has been described as a “slow death” by a Kolhapur-based distributor, who lamented, “Our shelves are stocked, but nothing moves. Consumers see Colgate at half price on apps and walk out.” This sentiment reflects the broader frustration among distributors, who feel that Colgate’s strategy prioritizes online channels at the expense of traditional trade partners. An AICPDF spokesperson went further, accusing Colgate of treating distributors as “expendable,” likening the company’s approach to that of a “colonial corporation.”

The situation is compounded by the fact that over 30% of the outlets listed by distributors are reportedly inactive, further eroding their business viability. The AICPDF has warned that if these issues are not addressed, the boycott could escalate into a nationwide campaign, potentially leading to the complete withdrawal of Colgate products from retail shelves and coordinated disruptions of the company’s supply lines.

Potential Nationwide Escalation

The AICPDF has not ruled out expanding the boycott beyond Maharashtra. If Colgate fails to address the distributors’ concerns, the federation has threatened to launch a nationwide campaign. This could involve not only halting purchases but also actively disrupting Colgate’s supply chain, which would have far-reaching implications for the company’s operations across India. The threat of escalation underscores the severity of the distributors’ grievances and their determination to seek a resolution.

Colgate’s Response

As of May 14, 2025, Colgate has not issued an official response to the boycott. Businessline reached out to the company for comment but did not receive a reply. The silence from Colgate has only fueled the distributors’ frustration, with many feeling that their concerns are being ignored. Without dialogue, the likelihood of a resolution diminishes, increasing the risk of further escalation.

Background of Similar Disputes

This is not the first time FMCG distributors have taken such drastic action. In 2022, a similar boycott was launched against Hindustan Unilever Limited (HUL) and Colgate in Maharashtra over price disparities between traditional distributors and organized business-to-business channels. That dispute was eventually resolved after talks between the companies and the AICPDF (Business Standard). However, the current situation appears more complex, with the added layer of GST compliance issues and the rapid growth of quick commerce platforms.

The Bigger Picture: Traditional Trade vs. Quick Commerce

The boycott highlights a broader conflict in the FMCG sector between traditional distribution networks and the growing dominance of quick commerce platforms. While platforms like Blinkit and Zepto offer convenience and competitive pricing to consumers, they often do so at the expense of local distributors, who are left with unsold stock and shrinking margins. This tension is not unique to Colgate but is a growing concern across the industry as more companies shift their focus to online channels.

You Learn

The ongoing boycott by Colgate distributors in Maharashtra underscores the challenges faced by traditional trade networks in an increasingly digital marketplace. With no resolution in sight and the threat of a nationwide escalation looming, Colgate must act swiftly to address the distributors’ grievances. Failure to do so could not only disrupt the company’s operations in Maharashtra but also set a precedent for similar actions across the country. As the situation unfolds, all eyes will be on Colgate to see how it navigates this critical juncture.

(India CSR)