FMCG companies added about 10 distributors on average every day since January last year to reach consumers directly through their dealers instead of using wholesalers.
India had a record 12,192 distributors in January this year, a 42% increase from 8,575 a year ago, according to Bizom, a sales automation firm that transacts with 7.5 million retail stores
The increase was driven entirely by the rural market while the dealer counts in the cities shrank.
Rural areas, which account for almost half of FMCG sales, now have about 11,024 distributors compared with 7,312 last year. Villages drove sales expansion as urban growth faltered amid the pandemic led-lockdown. Direct reach helps us establish a better connection with the retailer and also influences purchase behaviour.
Supply chain and logistics were severely impacted during the lockdown that started in March last year and this hit inventory at stores that were not part of the direct reach of companies. With more distributors in the villages, Kirana stores can reduce purchases from wholesalers and increase their margins by buying products directly from company-appointed distributors.
During the Covid-19 period, there was the irregularity of service from our distributors because of obvious reasons. But now we have brought the discipline back into place. We make sure that supervision is happening, and execution is happening as per the norms set by us, Britannia managing director Varun Berry said on an investor call last month. The market for daily groceries and household products grew 6.6% in the December quarter, the highest in the past 16 months.
