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Future Prospect of Indian Oral Care Industry

In terms of in dental hygiene, India is still a nascent country, with majority of the population still not having access to modern dental care and is still relying on substances like coal ash and neem sticks. Traditional materials like neem and tobacco are popular for cleaning teeth in the rural areas. The oral care industry in India is worth Rs. 5,400 Cr. annually & comprises of: Toothpastes: 60 %: Rs. 3,240 Cr., Tooth powder: 23 %: Rs. 1,242 Cr. and Toothbrushes: 17 %: Rs. 918 Cr.

Per Capita Toothpaste Consumption

Currently, toothpaste enjoys a country wide penetration level of 55 %, with only 15 % of them brush twice a day. The per capita consumption in India stands at 127gms/year; one of the lowest in the world.

Also, India’s per capita consumption is less than half of other emerging markets and almost 1/4th the amount of consumption in U.S. Given the low per capita consumption and penetration rates, toothpaste demand is mainly being driven by the overall market growth of 8-10 %. The penetration levels of dentifrice in the country have been on an upward trend over the last few years driven by strong improvements in toothpaste penetration.

The toothpaste segment in India is largely a two player industry, Colgate & Hindustan Unilever (HUL) which account for ~76 % of the entire market. For years, Colgate has dominated the toothpaste market in India (market share as of October 2013 ~ 54.33 %). The Company is India’s biggest oral care products company with more than 95 % of its sales coming from this product category. 

Indian Oral Care

The rising per capita consumption, leading to high penetration levels for the toothpaste category in India, has resulted in higher volume growths for leading players, Colgate and HUL in the second quarter ended September 30, 2012 (Q2 FY13). Colgate gained 10 % YoY growth in overall volume in Q2 FY13, also HUL’s oral care portfolio grew in double digits YoY because of the relaunch of Close-up and Pepsodent driven by the premium range. .

Colgate’s net profit rose to Rs. 145.08 Cr. in Q2 FY 2013 against Rs. 99.68 Cr. in the corresponding quarter ending of previous year, an increase of 45.5 %. Revenue for the quarter rose 17.73 % to Rs. 773.77 Cr. from Rs. 657.24 Cr. HUL’s net profit jumps to Rs. 807 Cr. against Rs. 689 Cr. in the corresponding quarter ending of previous year, an increase of 17.1 %. Revenue for the quarter rose 11.6 % to Rs. 6,155 Cr. from Rs. 5,516 Cr, when compared with the prior year period. 

With the rising awareness among consumers, sensitive toothpaste segment has also become a highly attractive segment to operate in. The segment has been growing at 50 % year on year and will be proved as a highly demanded toothpaste segment in the next three to five years. In the view of this, GSK Consumer (GSK) launched Sensodyne, toothpaste for sensitive teeth. Sensodyne is competing with the market leader Colgate – Palmolive (Colgate), which already has a product in this segment – Colgate Sensitive.

Further, FMCG giant Procter and Gamble (P&G) is also geared up to enter the toothpaste segment in India (it already has its toothbrush products in India with). P&G launched Oral ‐ B toothpaste in several countries like Venezuela, Greece, Portugal and Israel, and aims to launch it in several more markets over the next six months. All these factors would mean Colgate will have to invest heavily in brand building, advertising and promotional activities, which could put operating profit margins under check to maintain its leadership position.