Rahul Akkara Associate Vice President – Brand, JSW Cement

The distribution of cement to the end user from the manufacturer is a major cost factor in the landed cost of cement at the user end. Rahul Akkara, Associate Vice President – Brand, JSW Cement, a subsidiary of JSW Group, says that in the business of cement, one has two models of distribution: Factory-C&F-Dealer-Sub dealer; and Factory-Builder.

Rahul Akkara in an interaction with the ICR team shares the positives and negatives of cement distribution in India, and how it can be improved.

How cement distribution channel is different than that of FMCG products?
The business of cement is very different and complex as compared to the FMCG business. In the case of FMCG business, one has a pattern of distribution, i.e., factory-stockist-retailer. In the business of cement, one has two models of distribution:

a)Factory-C&F-Dealer-Sub dealer
b)Factory-Builder

What are the positives and negatives of cement distribution and FMCG product distribution channels?
In the cement business, the dealer is accountable for expanding the base across his/her territory and for doing this, he/she needs to have a good sub dealer base, which would help him achieve this. Also the dealer should also have good networking with influencers such as contractors, engineers, masons and builders, who are also equally responsible to increase business for a cement brand in his territory.

According to you what needs to be corrected or improved in cement distribution channel?
Channel partners need to ensure steady movement of material from the sub dealer outlets. The dealer needs to frequent sub dealer outlets, understand the consumers who typically frequent sub dealer outlets and provide solutions to simplify the buying process.

Are there any reginal differences in distribution?
The distribution model is more or less uniform across markets

Is the concept of exclusive dealership working? Taking into account competition act, what are its legal implications?
The concept of exclusive dealership works in cases where the brand enjoys a higher share of market and higher share of voice. It also operates in markets where the brand is able to command price premium and generates greater pull for its products.

Any comment on the ?Shoppe? concept started by few cement companies. How it will progress further?
The concept of cement shoppee, which was started by a few cement companies though small, is definitely in the radar for most companies.

The important thing is how would brands like to make use of the shoppee. Some would use it as a point of sale, while some would use it as a experience store.