Toothpastes are one of the highest competitive-intensity products within the 12,000 crore oral-care industry. Being a staple convenience product, a relatively inexpensive item that merits little shopping effort, toothpaste companies require heavy marketing spends to build brand recall and secure precious shelf space. In Patanjali’s ads, Dant Kanti seems to serve as forebearer of the brand’s other products, signalling how important toothpastes are to the company’s revenue portfolio.
In today’s post, we explore the makeup of the toothpaste market and see what lies ahead.
The market
Toothpaste volumes have seen sluggish growth in the past few years, often trailing around the 2-4% range. The real growth driver of the sector is differentiation - and firms are racing to create and compete in new niches to unlock higher revenues per unit. Broadly speaking, toothpaste brands cater to freshness, whitening, caries protection, herbal and all-purpose need types. Growth in most of these types has plateaued with the exception of herbal pastes.
The incumbents - Colgate and HUL - while still holding the top 2 spots in the market have been pushed to the brink in their relentless battle for market share in recent years, partly due to Patanjali’s entry. We explore each of these major players and how they are competing:
Colgate - A brand built over 80 years, Colgate remains the undisputed market leader in India. However, the firm missed the ship of shifting consumer preferences towards herbal - a gap it is now trying to close with Cibaca Vedshakti. Colgate-Palmolive’s network of nearly 6 million retail distributors is its biggest fortress against Patanjali Ayurveda which distributes through a million retailers (plus 5000 of its own retail outlets). In the near future, Colgate’s ability to grow in the natural/herbal segment will decide if it can win back lost market share.
HUL has suffered the biggest market share losses. While CloseUp is a market leader in freshness (12.5 percent volume share in overall category), Pepsodent continues to lag behind. The firm has tried to course-correct with relaunch of the Ayush brand, but the products were only partially successful and failed to get uptake in North India, highlighting the need to finetune herbal offerings to local preferences.
Dabur was the only large player to emerge unscathed from Patanjali’s expansion, thanks to its longstanding focus on Ayurvedic formulations. Dabur Red Paste, the firm’s flagship toothpaste brand has been among the fastest selling toothpaste brands in the country, steadily gaining market share. The company is building market share on both ends of the price spectrum - expanding the Red and Meswak brands to premium formats and brands like Promise to low-priced options for rural franchises. As per their latest annual report, Red Paste continues to outperform the herbal category, growing by nearly two times the category growth rate.
Ayurveda shines bright
Increasing awareness of negative effects of fluoride in toothpastes has led to greater variety in herbal products based on traditional preferences and practices. Oral hygiene awareness continues to grow in rural households, which are directly transitioning from traditional cleansing methods and tooth powder to herbal toothpastes.
Patanjali and Dabur, both home-grown brands, have increased consumer penetration by aggressive advertising and organizing oral health camps in rural areas. But they will have to defend their turf as Colgate’s Vedshakti and HUL’s Ayush can quickly catch up, riding on the back of their companies’ stronger brand recall and established footing among Indian consumers.