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Smaller brands show larger teeth

While the toothpaste market is showing double digit growth, it is the smaller brands that seem to be cashing in, especially Dabur’s brands; the biggies appear rather silent, reports Saurabh Turakhia.

india Updated: Mar 20, 2008 23:40 IST
Saurabh Turakhia

Here’s an interesting one to chew on: the highly penetrated oral care market is still marking a double digit growth, even though there is hardly any innovation in product or brand communication.

Just check out the AC Nielsen figures (see box). The market is growing, as the figures indicate, never mind the lack of action. As Santosh Desai, MD & CEO, Future Brands, says, “Though the category is such that one doesn’t want a surprise in the mouth every morning, the relative lack of innovation is evident. It is a market that is not yet overcrowded with brands. Even the new variants that get introduced are products with minor changes here and there. The monotony is evident in both, product offering as well as the manner in which it is communicated.”

So if it is not innovation or marketing initiatives by the brands that is driving growth, what is? “The consumer,” says VS Sitaram, executive director — marketing (Consumer Care Division), Dabur India Ltd. He states, “The oral care market is one of the highest penetrated categories – at around 80 per cent – in the country. That said, toothpaste penetration stands at over 50 per cent, which reflects the growth potential that the segment offers. The value growth of 13.2 per cent has been largely driven by a consumer shift in rural markets from toothpowders to toothpastes, an overall increase in demand and some price increases in the industry.”

He adds that a higher degree of conversion from non-users to users has helped the toothpaste market grow in double digits. Earlier, consumers were shifting from ‘datuns’ to toothpowders and then to toothpastes. But now, many are moving from datuns to toothpastes, directly. Developing the night brushing habit in India, he says, would further accelerate growth for toothpastes.

However, even if it is consumers who are driving growth currently, it’s not that all brands are benefiting equally. In fact, the big guns such as Colgate and Pepsodent have not been able to put in the kind of performance Dabur, with its Promise, Babool, Dabur Red and Meswak, has managed to put in. Anand Shah, FMCG analyst at Angel Broking, points out, “Hindustan Unilever has, for the first time, seen its share falling below 30 per cent, which is certainly a cause for concern.” Pepsodent lost share in 2007 at 12.5 per cent, against 13.7 per cent in 2006. Even Colgate’s volume share in 2007 dipped to 36.6 per cent, from 37.4 per cent in 2006.

Dabur, says Shah, with 10 to 12 per cent share, is growing quite rapidly. The rest of the market is divided between smaller brands such as Anchor, Ajanta and the like. He adds that while Hindustan Unilever’s Close-Up is growing, the gel market is not very large. Colgate, he says, is growing at the rate at which the market is growing.

Sitaram says Dabur has a 12.5 per cent market share and that its toothpaste brands have emerged the fastest growers, at a cumulative growth of 33.8 per cent in value terms and 31.5 per cent in volume terms in calendar 2007. “In comparison, the industry has reported a 13.2 per cent value growth and a 9.4 per cent volume growth in 2007. Dabur operates in all three toothpaste segments – economy with Babool, popular with Dabur Red and premium with Meswak. While the industry is witnessing growth in the economy and popular segments, Dabur has seen robust growth across all three segments,” he says, adding that in the toothpowder market too, Dabur has managed to grab a 30 per cent volume share.

While Sitaram attributes Dabur’s growth to “the herbal economy positioning” adopted with the brands, others add more perspective on the market. Desai says, “The consumer today isn’t averse to downgrading in a category such as toothpaste, to spend the saved money on other exciting categories such as, say, hair colour. Lack of innovation adds to this behaviour.”

Sashi Nair, president, sales and marketing, Anchor Health & Beauty Care, adds, "For the last three years, this category has witnessed product commoditisation. A large number of lower priced products from Colgate and others have led to a significant migration to low priced products – they account for approximately 25 per cent of the market today."

Everyone agrees there’s scope for attractive growth for toothpastes. He smaller players seem to be more active on cashing in. Anchor White, for example, has roped in actor Kajol recently for ad endorsement because, Nair explains, “about 60 per cent of toothpastes are sold on the family platform in India. There is, generally, one toothpaste for the entire family." In Desai's opinion, the move of signing on a celebrity is also a silent communication to the consumers that Anchor has arrived.

While there is new advertising from Pepsodent on television, both Colgate and HUL may perhaps need to shake themselves into action in a category that still promises good growth.