Distributors for Mamaearth are facing problems with too much stock, according to the All India Consumer Products Distributors Federation (AICPDF). Goods worth ₹50 to ₹100 crore are stuck as Honasa, Mamaearth’s parent company, shifts more of its business offline. Honasa currently gets a third of its sales from offline channels.
Honasa has denied these claims. The company, which also owns brands like Dr. Sheth’s, Aqualogica, and BBlunt, says the issue mainly affects Mamaearth.
The federation claims that distributors have 90 days’ worth of stock, whereas fast-moving consumer goods (FMCG) companies usually supply for 20-30 days or 45 days at most. Fresh orders are usually placed based on how quickly products sell in stores. Distributors then restock the stores.
This issue has been ongoing for several months, said an executive from the federation. “Once goods are billed to the distributor, the liability is on the distributor. Distributors have placed the products in stores, but sales haven’t met expectations,” said Dhairyashil Patil, national president of the AICPDF, to Mint.
Close to Expiry
In a statement on Monday, the federation highlighted the risk of stock expiry at warehouses and stores, along with a significant amount of unsold inventory returned by retailers. It claimed Honasa has delayed replacing damaged, unsold, and expired stock. Patil said some products have been with them for over a year and could be nearing expiry.
A company spokesperson denied the federation’s claims, saying the statement had errors. “Honasa Consumer Ltd is focused on building strong relationships with distributors based on trust and mutual benefit,” the spokesperson said. “We use technology to track inventory, sales, and promotions to ensure transparent processes. We are committed to addressing any concerns raised by our distributors.”
Patil said the federation has raised the issue with the company several times. “We have asked them to replace old stock with fresh stock. A lot of inventory is still with retailers,” he said. About 200-300 distributors are affected by this issue, said Patil.
Honasa has been increasing its presence in offline stores—a major sales channel for FMCG companies in India. Small mom-and-pop stores still account for most FMCG sales in the country.
As of March 2024, Honasa’s products were available in 1,88,377 retail outlets. The company, which listed on the stock exchanges last year, started selling offline four years ago. Last quarter, Honasa announced plans to revamp its offline distribution.
Honasa Consumer shares closed at ₹473.60 on the BSE on Monday, gaining 4.89% year to date. The company posted a profit of ₹111.7 crore in FY24, compared to a loss of ₹142.8 crore the previous year, with operating revenue rising 28% to ₹1,919.9 crore.
Honasa has moved to a direct distribution model in the top 50 cities, moving away from super stockists, citing the important role offline trade will play in expanding its product range and market share. This change was made in the third quarter of FY24.
“There are three pillars to our strategy: transitioning from super stockists to direct distributors in the top 50 cities; bringing in high-quality FMCG distributors with strong direct reach; and implementing a customized distributor management system and sales force automation,” said Varun Alagh, co-founder, chairman, and CEO of Honasa Consumer, during an earnings call in May.
Others in the trade also reported that distributors in general trade have struggled with over-stocking.
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