The country’s Rs 6,000 crore oral care market has always been intensely competitive, but never was there a dispute about Colgate’s supremacy – it has a whopping 55% market share. Of late, however, the market leader has been challenged by GSK to a degree unknown to existing players like HUL and Dabur as well as would-be rivals like P&G.
For instance, in the sensitive toothpaste category, which accounts for 5% of the overall toothpaste market, GSK, the maker of Sensodyne and Parodontax brands of toothpase, has scooped up a 26% share, overtaking erstwhile leader Colgate which now has a 25% share, as per the latest Nielsen report.
GSK, market observers said, is better represented in chemist channels. In order to wrest back lost market share, Colgate is expected to increase its presence in this channel.
“This (sensitive toothpaste) segment has been growing at a fast rate due to premiumisation. Colgate aims to expand its pharmacy network to increase ‘sensitive’ sales,” wrote Abneesh Roy of Edelweiss in a report, after meeting Colgate’s management.
Going ahead, the company is going to face severe competition from P&G which is set to enter India’s toothpaste market. Which is why, Colgate is preparing itself for competition.
Roy said that since P&G’s entry has been expected for a long time, other players, including Colgate, have been aggressive in distribution, innovation and promotion. So much so that Colgate expanded its presence 25% across trade channels with special focus on rural areas.
So far, the oral care market is believed to have ducked slowdown pressure. The only segment which has slowed is the Rs 100-150 crore mouthwash category – its 10-12% growth now is a far cry from the 25-30% growth rates seen two years back.
In order to shrug off impact of economic slowdown, Colgate is encouraging category growth via promotions in smaller stock keeping units (60 ml each priced Rs 40), to induce a habit and thus repeat purchases, said Roy. “We believe uni-dosage is a growth opportunity in the mouthwash space which will help rapid category expansion.”
But for now, Colgate is completely focused on retaining and increasing its market share in the oral care business, said market observers. As a result, the company has not been focusing or investing heavily in marketing and distribution of other products such as hand-wash, body-wash or skin creams.
As competition intensifies, other players are likely to increase their advertising spends which, in turn, could impact gross margins.
With P&G’s entry now appearing imminent, several brokerage houses have turned underweight on Colgate. But P&G’s penetration into the Indian oral care market is likely to be gradual, and may not rock the Colgate boat immediately.
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