Colgate’s hold over the oral care market slips

Colgate Palmolive India’s share in the toothpaste market fell the steepest in a decade by 180 basis points in FY17, as consumers increasingly shift to ayurvedic or herbal brands.
Colgate’s volume share fell to 55.5% in the year ended March, its lowest since 2012, according to the company's latest investor presentation. In contrast, rival Dabur's share grew by 140 bps in FY17, while Patanjali’s increased by 150 bps, underlining the growing demand for ayurvedic products and forcing most companies to launch herbal variants of toothpastes. Products with “natural” ingredients now account for nearly a fifth of the overall toothpaste market.

Colgate’s share in India had consistently increased in the previous five years, as rivals, especially Hindustan Unilever, faltered. HUL, which sells Close-Up and Pepsodent brands, saw its share dip 50 bps to 19.6% in FY17. But FY17 has been particularly bad for the Indian unit as its annual volume shrunk 2% amid 4% rise in net sales mainly due to price hikes.

Analysts said Colgate has lost share despite new launches in the natural segment, superior distribution channel compared to competitors and increase in its spends on advertising and promotions. “We remain ‘Sell’ on Colgate till it’s able to arrest market-share loss in the toothpaste category, drive growth from the new category,” wrote Anuj Bansal of Ambit Research in an investor note.

The $16-billion MNC has global experience in the natural segment, having acquired Tom’s of Maine in the US a decade ago, while Colgate Mishvak is present in Turkey, Indonesia and elsewhere.

It launched its first India-focused ayurvedic brand Cibaca Vedshakti in August last year, aimed squarely at Patanjali’s Dant Kanti toothpaste. The Baba Ramdev-led Indian brand has been able to challenge the multinational’s dominance in the segment despite being present in only two-lakh traditional retail stores against Colgate’s access to over five-million stores.

Colgate Cibaca VedShakti has 0.5% share across India and 1% share in the north and eastern regions, Colgate told analysts.