X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Oral care: Expansion through education - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 6, 2002

    Oral care: Expansion through education

    The Indian fast moving consumer goods (FMCG) market is valued at Rs 180 bn. The 90,000 TPA oral care segment contributes around Rs 21 bn to this pie. The segment has many players in many sub-segments. The major players in the oral care market are Colgate (over 50% share), Hindustan Lever (36%), SmithKline Beecham (4-5%), Balsara, Dabur, Himalaya Drug, Anchor, Gillette and Forhan’s.

    It is apparent that Colgate and Hindustan Lever (HLL) call the shots in this segment, which has been traditionally growing 9-10%. However, in the last couple of years growth has turned sluggish at 3-5%. Infact, market leader Colgate has stated that growth has been stagnant in the last few months of FY02.

    India being a price sensitive market, the growth strategy revolves around pricing strategies. Colgate prices some of its products at a premium to HLL. However, competition has expanded to product differentiation also (gels, gum care, calci guard, mouth wash, toothpowder and different type of flavours). Since these two companies dominate the segment, much of the tug of war over pricing, product segments and initiatives come from them. While HLL is constantly trying to inch up market share ladder, Colgate tries to hold onto its pie and consolidate. As a result, ad expenses are pretty high in the segment. While we don’t have figures for HLL’s advertisement support to its oral care business, Colgate spends over 20% of its revenues on promotions and advertisements.

    But if the market is not growing, why are these two majors competing so fiercely? Because not withstanding the recent stagnation, the oral market has a huge potential to expand. As per estimates, an average Indian consumes 82 grams of toothpaste per annum. In contrast, Thailand consumes 262 grams, Mexico 376 grams and the US per capita consumption stands at over 6 times India levels (518 grams).

    One reason for this stagnating growth could also be a huge urban-rural consumption mismatch. According to estimates, penetration of toothpaste is a healthy 75-80% in urban India, whereas it is only 15-20% in rural India. As a result, urban India contributes 65% to the total volumes in the oral care business. The per capita consumption of toothpaste in urban India is 153 grams per annum, almost 4 times of rural India. With urban India already highly penetrated incremental growth becomes difficult.

    In order to reduce this mismatch, both Colgate and HLL have taken to the rural market with gusto. HLL already is the trendsetter in recognising rural potential. Colgate too has initiated operation ‘Jagruti’ to improve its rural penetration. The aim is to educate the masses about oral care and its benefits vis-à-vis traditional teeth cleaning methods like ‘datoon’ (neem plant).

    The focus has also shifted to children. Corporates realise that oral care is a lifelong habit and once developed in a child, generates lifelong customers. So, oral care companies are tying up with schools to educate children on oral care. The focus of advertising in print and television has also shifted to children. Also, the focus is on brushing twice a day, in a bid to expand per capita volume growth.

    Though market expansion has hit a roadblock in recent times, with improvement in rural economy and the measures taken by the industry to improve usage of products, the oral care market is likely to show an improvement in the long term.

     

     

    Equitymaster requests your view! Post a comment on "Oral care: Expansion through education ". Click here!

      
     

    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    P&G: Strong Core Growth (Quarterly Results Update - Detailed)

    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.

    Nestle India: Sales Traction From New Products (Quarterly Results Update - Detailed)

    Nov 30, 2016

    Nestle India declared results for the quarter ended September 2016. Here is our analysis of the result.

    GSK Consumer: Price Hike Hurts Volumes (Quarterly Results Update - Detailed)

    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.

    Marico: Margin Expansion Drives Profit Growth (Quarterly Results Update - Detailed)

    Nov 28, 2016

    Marico has reported a flat topline while the bottomline has grown by 18% YoY during the quarter.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE FMCG


    Aug 23, 2017 03:36 PM

    S&P BSE FMCG 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS