KOCHI, May 17: Retailers and distributors in Kerala have hardened their stand against Hindustan Lever (HLL) in their battle for higher trade margins.

They have rejected a suggestion from HLL that the burden of higher margins be passed on to consumers. "We will not allow HLL to raise prices for paying us higher margins," says an office-bearer of the Kerala Vyapara Vyavasaya Ekopana Samiti (KVVES), spearheading the call to boycott the HLL brands under dispute.

The retailers have also pooh-poohed a threat by HLL that it will directly market its products in Kerala. "They are free to do it," says the All-Kerala Distributors' Association president P U Jose.

The threat that HLL products - Lifebuoy and Lux brands of soap, Brooke Bond tea and coffee - may be boycotted, assumed grave proportions on Friday as distributors refused to accept a consignment of 100 cases of Lifebuoy and Lux soaps. Distributors have declined to them since May 15.

In Thiruvnanthapuram, a similar consignment was unloaded with police help. All Lifebuoy and Lux variations were convered by the boycott.

These products will be off the retailers' shelves from June 1 if HLL fails to increase trade margins by five per cent, at the least, from 3.5 to 4 per cent now.

Kerala is a big market for HLL products. The multinational sells soaps worth Rs 465 crore. Total sales in the country is estimated at Rs 1,400 crore, making Kerala account for nearly a third of the figure. The Brooke Bond Green Label coffee from the HLL stable is the market leader in the state; together with its brand of tea, the company's beverages market is around Rs 220 crore.

Sensing the real danger of a boycott by the KVVES, HLL introduced a scheme for its beverages. For every five kilos of Brooke Bond tea sold, the retailer is given half-a-kilo free. The Kannan Devan brand of tea, from the Tata stable, too, has come out with a similar scheme to fend off competition.

Retailers are claiming that they have had a share in building the HLL brand image in Kerala. "It is the retailer who sells the product to the customer," says KVVES Ernakulam district president K P K Menon. The retailers' ire is directed against the attitude of the company which spent about Rs 1,600 crore in advertisements alone during 1996-97.

"They can pay us higher margins with a fraction of what they spend on product campaigns," says P U Jose.KVVES, which enjoys the allegiance of nearly 90 per cent of retailers, has 3,000 units spread across the state.The All-Kerala Merchants' Association and the All-Kerala Distributors' Association have also joined hands with KVVES in demanding higher trade margins from HLL.

A KVVES spokesman told FENS that the boycott of HLL products is also aimed at ending the era of fixing trade margins without consulting retailers. While leading companies like Cadbury, Procter and Gamble, Johnson and Johnson and Sithkline Beecham have held talks with the retailers in the state on th issue of margins, HLL has not come forward for negotiations.Meanwhile, the boycott of Horlicks by retailers and distributors, is continuing. The leading health drink from Smithkline Beecham has a Rs 300-crore market in Kerala but has been off the retailers' shelves for nearly a month now after distributors refused to accept Horlicks consignments.

The distributors have accused Horlicks-makers of pushing the product too hard and `dumping excess stocks' on them. A distributor for Horlicks in Kochi said: "We are often loaded with more than what we ask for."This has lead to heavy inventory maintenance, he said. Distributors are demanding that the company stop dumping stocks on them.