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Indian Oral care sector: Say Cheez!

Dec 27, 2006

World over, the oral care sector is represented by toothpaste and toothbrush. Other products include mouthwash, sprays and oral rinses. In India, there is significant presence of toothpowder as well. Valued at Rs 21 bn, the Indian oral care market is dominated by large multinational companies and a few Indian ones such as Anchor, and Dabur. Major players in this market are Colgate Palmolive, HLL and SmithKline with its Acquafresh brand. Segmentation
Toothpaste: Toothpaste is segmented based on product attributes as white, gel and herbal. White toothpaste leads the pack with 50% market share. Price wise, toothpaste can segmented as economy, regular and value added products. About 60% of the toothpaste is sold on family platform in India. There is generally one toothpaste for the entire family. Only 35% of the toothpastes are sold on cosmetic propositions.

Toothpowder: Use of toothpowder is not a global phenomenon. Toothpowder was developed to cater to the people who used the traditional products like salt, neem and other herbal products. The unorganised sector mainly catered to this market and the products were black and red in colour. It is only in the last few years, that the MNC's have ventured into the toothpowder segment and launched the white toothpowder. Today it accounts for 65% of the market share.

Only about 50 %of India's population uses toothpastes, around 35 % uses toothpowder while the rest, mainly concentrated in the rural areas, are yet to adopt oral care. Unlike western countries, the market for innovative oral care accessories such as mouth freshening washes, dental floss and teeth whitening products are at a nascent stage in India. The use of these products is limited to urban areas only.

Market players: Colgate Palmolive is the market leader in the oral care segment. Colgate is a household name and until a few years back, Colgate was almost like a generic name for toothpaste in India. Colgate and HLL together account for over 70% percent of the organized toothpaste market. In toothpowder segment, Colgate and Dabur are the two major players with Colgate having 48% share. Colgate also has major share of approximately 30 % of the toothbrush market.

Opportunity:
Penetration of modern oral care products is very low in India. The average per-capita consumption of toothpaste in India is very low at approximately 110 gms and many people in rural India still clean their teeth with traditional products like twigs of the neem tree, salt, ash, and other herbal items. Also, people brushing twice in a day are just 7% of the population as compared to 61% in China.

Percapita
consumption
% twice
brusing a day
China 219 61
Malaysia 285 86
India- Urban 110 7

To promote greater penetration of oral care products in the rural areas, major players like Colgate and HLL in association with dental associations have launched nationwide community dental health programs and informative commercials on oral health to raise awareness on dental hygiene. The companies are also using channels like e-choupals and Disha (unregulated periodic markets). Colgate increased its reach from 162 villages in 2004 to 3,765 in 2005 through Disha.

The oral care sector witnessed a slump from 2000 to 2004 due to economic and agricultural slowdown. The shrinking market size spurred the two largest players in the market into frenetic activity to pep up growth rates. The players first trained their guns on enhancing the penetration level, that is, bringing new users into the toothpaste segment. For much of 1999 and 2000, both Colgate and HLL pepped up their rural distribution network and refocused on low-unit packs (smaller packs of toothpastes at affordable prices). They did manage to get success and the FMCG was back on track since 2005. Though the users have increased a lot of opportunity exists in this segment. Toothpastes now reach only 67% of the urban households and 33% of the rural households and there is considerable scope for market expansion through the conversion of toothpowder users. There is also potential for converting users of red toothpowder to white toothpowder. With increasing awareness and advertising campaigns, the overall penetration of oral care products in India is likely to multiply exponentially in the next two to three years. .


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