Colgate Palmolive may be the market leader in oral care, but its declining market share since March 2016 is expected to get stemmed with the help of new products launched in the ayurvedic segment.
The decline in market share was triggered by the sudden surge in consumption of ayurvedic toothpastes, led by Patanjali’s entry into the segment.
This prompted Colgate to combat competition with new launches such as Colgate Swarna Vedshakti and Cibaca Vedshakti.
The firm’s market share has been sliding steadily from 55.7 per cent in Q4 FY16 to 53.7 per cent in Q3 FY18.
A recent report by Edelweiss states that Colgate’s revenue trajectory is a tale of two sides. While revenue CAGR (compound annual growth rate) over FY10-14 was 15.5 per cent, backed by double-digit growth, the revenue trajectory over FY14-17 was three per cent on account of flat to low single-digit growth.
Though the firm remains a market leader, its market share has been declining ever since it peaked in March 2016.
While Colgate remains confident that the market share loss that started from Q1 FY17 is likely to ebb, the gains hereon will be gradual, starting H2 FY19.
In a key takeaway, the Edelweiss report added that even though Cibaca Vedshakti has garnered market share as high as fiver per cent in certain markets, the product has not cannibalised Colgate’s ayurvedic and other toothpaste categories.
Analysts at Edelweiss estimate Colgate to clock six per cent volume growth from FY19. This, coupled with steady price hikes of 3-4 per cent and renewed focus on the personal care category with Palmolive, is estimated to pave the way for 10 per cent revenue CAGR over FY17-20. Macro drivers such as increasing penetration and low per capita consumption, will also aid the growth.
The firm is now taking steps to ensure deeper penetration of Cibaca Vedshakti and Swarna Vedshakti with more stock-keeping units (SKUs) and superior packaging over competitors.
Pricing
It is also playing on the pricing front with Cibaca Vedshakti priced 12 per cent and five per cent cheaper than Dabur’s Meswak and Red, respectively. Swarna Vedshakti is priced 12 per cent and 39 per cent lower than Lever Ayush and Patanjali Dant Kanti Advanced, respectively.
But the report warns that the overall competitive intensity has not eased. While Colgate is trying to bring hygiene through lower saver/value packs, competition has been snapping at its heels.
Dabur continues to remain a strong competitor, deepening its penetration in rural and South India, and Lever Ayush is stretching its penetration pan-India and trying to gain market share in the ayurvedic toothpaste segment.
A Colgate spokesperson declined to comment on the report.