Mar 18, 2000|
Teeth sparkling competition...
Markets share of toothpaste kings
India's per capita consumption of toothpaste is one of the lowest in the world, it currently stands at 70 grams as compared to the global average of 362 grams. This is because 74 percent of our population live in rural areas and are not well versed with personal health and hygiene. As the penetration level of this rural segment is at a low of 30 percent, this means that only 200 million of our 740 million rural population uses toothpaste.
In the long term however toothpaste players have a tremendous potential to grow in this market. The reasons being that income levels are rising and the population is becoming more aware of personal hygiene. To add to this there is an increase in literacy levels across the country. As media will play an important role hence advertising keeping the rural Indian in mind will provide the much needed impetus for growth to this market.
The two largest players in the toothpaste market are Colgate and Hindustan Lever and they are constantly battling for leadership in this segment. Colgate has a market share of 49 percent and Hindustan Lever has a market share of 36.5 percent. The two players are more concerned to increase their market share but have not focussed seriously on increasing their market penetration to achieve this. They have both been targeting the urban market more. Both HLL and Colgate have been concentrating their advertising and marketing expenditure towards this segment but despite this the toothpaste market is growing at only a single digit rate of 5 percent per annum, which shows that the urban segment is fairly saturated.
The penetration levels of the rural toothpaste market is only 30 percent providing a gaping scope for improvement as compared to the urban market penetration of 70 percent. On an all India basis penetration is still low at 35 percent, due to higher population in the rural areas.
The successful players in this segment will be those companies who will be able to change the mindset of rural India and convince them to change their habits of using local black powder and chewing sticks to toothpaste. They will without doubt emerge to be the winners in the growing toothpaste industry.
These two players control around over 80 percent of India's oral care market. As they are spending heavily on advertising they will be unable to sustain these levels for a long time. Current estimates show that advertising and promotional spends in the toothpaste industry are pegged at around 25 percent of total sales. As the Indian consumer is still very price sensitive and would switch brands easily there is not too much scope for price increase. Therefore it may not be very feasible for these companies to continue to have such large advertising spends as they may not be able to pass on price increases.
The players need to focus on educating the rural consumers by advertising specifically keeping this target in mind, by organising health camps to educate them and by giving them price incentives. As this segment is very price conscious they should churn product variants at lower prices to garner the market share of rural India. Between the two players the market share of Colgate is higher in the rural areas, it has a 53 percent market share in rural areas as compared to HLL which has only 34 percent market share here.
Colgate dominates rural market share
In terms of competition to Colgate who has dominated the Indian toothpaste market for over 60 years, HLL with its marketing and positioning strategy ate away 10 percent of Colgate's market share in the last four years. The bulk of this has been in the urban markets. This is despite the fact that in the last five years Colgate has expanded its product base from 2 to 10.
Colgate has been firmly entrenched in the white toothpaste segment with its flagship product Colgate Dental Cream, however this brand lost market share to HLL. HLL's answer to this was "Pepsodent" in the white toothpaste segment. By effective strategy and advertising HLL managed to promote its brand "Pepsodent" and slowly garner up its market share.
However since the past one year Colgate has gathered its act and is once again becoming a fierce competitor to HLL's brands. In the past year to counter HLL's presence in the toothpaste market Colgate launched three new brands: Colgate Double Protection, Colgate Total and Colgate Sensation Whitening. The company has also re-launched its flagship brand Colgate Dental Cream by improving on it and re-positioning this brand.
More Views on News
Aug 9, 2017
While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.
Dec 9, 2016
Procter & Gamble Hygiene and Health Care has announced the first quarter results of the financial year ended June 2017 (1QFY17). The company's sales rose by 12.5%YoY while net profit rose by 50.1% YoY during the quarter.
Nov 30, 2016
Nestle India declared results for the quarter ended September 2016. Here is our analysis of the result.
Nov 30, 2016
GSK Consumer Healthcare declared results for the quarter ended September 2016. The revenues dropped by 1.3% during the quarter as compared to a year ago; while the profits declined by 16.6% YoY during the quarter.
Nov 28, 2016
Marico has reported a flat topline while the bottomline has grown by 18% YoY during the quarter.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 4, 2017
The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407