Breaking into new territory: Colgate’s brush with beauty

Teeth whitening has been the fastest-growing segment of the toothpaste market in the Asia-Pacific region over the last couple of years, contributing up to 40% to the overall category value in some cases. But in India it is still at a nascent stage and contributes only about 1% in value to the Rs 12,000-crore market.

In other words, the legroom for growth is immense, says Gunjit Jain, executive vice-president, marketing, Colgate-Palmolive India (CPIL). “While whitening is still a nascent segment in India, it is among the fastest-growing. For us too the contribution is small today, but the contribution to growth percentage is significant. As penetration grows, volume contribution will improve further,” he adds.

CPIL entered the teeth whitening segment in 2013 with its Visible White toothpaste at a price of Rs 79 for 100 gm and Rs 40 for 50 gm. Since then it has built a portfolio of four products — Colgate Visible White toothpaste (Rs 190) and toothbrush (Rs 250) , professional whitening pen (Rs 1,999), and O2 toothpaste (priced at Rs 250 for 50 gm).

Rajat Wahi, partner, Deloitte India, says it is a fast growing segment with high margin potential. But the side effects of teeth whitening components have limited the development of the categoryto a certain extent, say analysts.

Given that, what are the options for CPIL, the largest oral care company in India with more than 50% share in a market that has near 100% penetration?

Betting on premiumisation

CPIL’s bet on the beauty segment in oral care goes hand in hand with a growing effort by the company towards premiumisation. Says Jain, “Premiumisation is a key growth strategy for us. People’s expectation from the category is still largely about oral cleaning, so it is up to us to raise the bar to oral health plus beauty. We are well-placed to drive premiumisation in the category.”

In line with the strategy, CPIL has, over the years, launched a slew of value-added products. Colgate Visible White and some of its extensions are part of premium product portfolio. The launch of whitening pen device is also part of driving premium product portfolio.

Premiumisation can be an effective strategy to counter inflationary pressures as well as deliver a greater perceived value to the customer, say analysts. “About 86% of the toothpaste market is at the price point of Rs 110 or below. This gives immense premiumisation opportunity to the company,” as per a report by ICICIDirect. Add to that the fact that penetration of whitening toothpaste is merely 1.5% and one can see the kind of opportunity that is waiting to be tapped.

The opportunity isn’t lost on CPIL’s chief competitors. Hindustan Unilever, for instance, has Pepsodent White Now and Close-Up Diamond Shine in this category. Homegrown Dabur India has teeth whitening Activated Charcoal toothpaste (at Rs 199 for a 120-gm pack).

Wahi adds that while top players in the oral care market have rolled out new products with unfailing regularity, the consumer, in general, remains reluctant to dole out a premium for oral care products as they are perceived to be a necessity rather than indulgence products. Another challenge is the competition from mass-market brands that have a range of offerings at affordable prices, making it difficult for brands that command a premium to gain market share.

For its part, to drive awareness, CPIL has recently launched an advertising campaign that highlights the benefits of its Visible White toothpaste and spotlights the transformative effects of a whiter smile. “Effecting a behaviour change is the only way to bring about a big jump in category consumption and therefore premiumisation,” sums up Jain.

Rise and shine

Opportunities:

Growing demand for teeth whitening products: The demand for teeth whitening products is growing rapidly in India, as more and more consumers embrace whitening as part of the hygiene routine.
Premiumisation trend: The premiumisation trend in the oral care market is also creating opportunities for oral care brands to launch high-margin whitening products.
Strong brand recognition and distribution network: CPIL covers 1.7 million outlets in India. Up to 25% of its business is today attributed to new retail which includes modern trade and e-commerce.