The battle for niche oral care

The battle for niche oral care

Last Updated: Tue, Aug 21, 2012 19:07 hrs

It was exactly a year ago when Hindustan Unilever’s oral care rival Colgate-Palmolive stepped up its efforts in emerging categories such as sensitivity and mouthwash. The company launched an upgrade to its toothpaste Colgate Sensitive called Colgate Sensitive Pro-Relief and rolled out two variants of its Plax mouthwash in quick succession.

The endeavour was clear: To take on incumbents Johnson & Johnson (J&J) in mouthwash and GlaxoSmithKline (GSK) Consumer Healthcare in sensitivity — a condition where the patient is sensitive to anything hot or cold that he consumes. Dentists advise use of specific toothpastes to help bring down the pain caused by the condition.

Now HUL has opted to go down that road using the same two-pronged strategy that Colgate had a year ago. HUL recently launched a sensitivity-cum-whiteness toothpaste called Pepsodent Expert Protection. It also launched two mouthwash products under the Pepsodent umbrella.

During a conference call with analysts, HUL’s CEO & MD Nitin Paranjpe said that the launches were expected to fill key gaps in its portfolio.

While mouthwash is a Rs 150-crore category, it is growing at over 25-30 per cent per annum. The sensitivity segment, at eight per cent of the Rs 3,000-crore toothpaste market, has almost doubled in the last year-and-a-half since GSK launched Sensodyne (this was in January 2011). Analysts say sensitivity can no longer be ignored given the investment that both GSK and Colgate have made in market expansion. “Look how shrill the noise has been around sensitivity in the last one year,” says Anand Shah, fast moving consumer goods (FMCG) analyst at Mumbai-based brokerage Elara Capital.

The usage of mouthwash too, say market experts, is growing in the urban areas driven largely by market leader Listerine’s efforts (from J&J) in the area. Now even Plax from Colgate is actively doing ground-level work to promote use of mouthwash post brushing in India.

In sensitivity, both GSK and Colgate have competed head-on using advertising, brand-building and promotions to create awareness. Colgate’s India chairman Mukul Deoras had said at the company’s seventy-first annual general meeting recently that it would continue to keep its eye on new emerging categories. “Your company’s growth is sparked by innovative products that it brings to the market,” he had said when addressing shareholders.

While Colgate does not give a break-up of shares in toothpaste, its overall share in the category is up over last year to 54.5 per cent. Last year between January and June, Colgate had a share of 52.4 per cent in toothpaste. Analysts say new launches such as the one in sensitivity have helped the company gain incremental share. This is critical since GSK’s growth in sensitivity has been rapid in the last year-and-a half.

Jayant Singh, director, marketing, GSK, says his company now has a share of 25 per cent in the Rs 240-crore category. “We are leading the category growth,” he claims.

But experts say with HUL’s entry now, action is likely to heat up in the space. Its foray into niche categories, say analysts, is partly linked to the manner in which oral care as a whole is evolving in India. While powders, whites, gels etc have long established themselves in the toothpaste segment, consumers now are beginning to move from a basic hygiene regime to addressing more specific oral care needs or what HUL describes as “advanced care”.

Paranjpe makes no bones about it. He says, “The advanced care segment is growing rapidly and we hope to create a reasonable presence in that market.”

Analysts estimate that this advanced care market - which is priced almost two to three times regular oral care products - will grow in the next few years. Companies are beginning to take note of this. “For those seeking to go beyond the regular cleansing routine, products that offer something more will become important,” says Singh of GSK.

The British pharmaceutical and consumer healthcare major is said to be weighing the option of introducing more oral care products from its international portfolio following the success of Sensodyne in India. Worldwide, GSK is a leading player in oral care deriving close to 35 per cent of its consumer healthcare revenues from this category. Popular brands include Aquafresh, Biotene, Dr Best, Macleans etc. Singh declines to indicate the company’s forthcoming plans in this area.

But with rivals upping the ante especially at the premium end, experts say that HUL, which has a market share of about 26-27 per cent in oral care, according to industry estimates, and ranks second after Colgate, had no option but to respond to this challenge. The first salvo has already been fired.

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