Companies

Colgate smiles, thanks to ‘naturals’

Priyanka Pani Mumbai | Updated on October 31, 2018

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Revamped portfolio in naturals segment boosts revival

 

Toothpaste and shampoo maker Colgate Palmolive (India) is back on track to regain its market leader status.

Colgate had been seeing tepid growth in sales over the last several quarters due to competition from home-grown Patanjali. However, the Mumbai-headquartered company has shown signs of revival on the back of its revamped portfolio in the naturals segment.

The oral-care major posted 10 per cent growth in profits and 7.7 per cent growth in sales, year-on-year, during the September quarter, with overall volume growth at 7 per cent, which is at par with the industry growth. Colgate competes with Dabur and Hindustan Unilever in the toothpaste category and enjoys a brute market share of 52.5 per cent, a slight improvement compared to the previous quarters.

John Faucher - SVP, Investor Relations, Colgate Palmolive, said, “There has been improvement in performance of our India business. We continue to deliver volume growth with positive pricing despite high levels of competitive activity.”

Analysts are of the view that higher ad spends, launch of more variants, price hikes and online focus have led to improved market share. “Overall volume growth was 7 per cent y-o-y, the same in toothpaste (including exports) was 5-6 per cent. Colgate’s strategy of focussing on the naturals portfolio has evinced an encouraging response, with repeat purchases. The positive impact should be partly reflected in H2 FY19,” said Abneesh Roy, Senior Vice-President at Edelweiss.

Innovation-led

Ian Cook, CEO, Colgate Palmolive, in a recent global investor call, said, “We think innovation is a big part of what we need, going forward. And we have stepped into now changing the shape of our portfolio as part of that innovation. And that may be the transfer of a global brand to a new geography or a new retail channel, as we have described, or indeed the development of a local brand, either in response to a competitor, like Vedshakti in India now transferred under Colgate Naturals Panjaved.”

Patanjali, which launched its toothpaste a few years ago, has been giving tough competition to Colgate and HUL. However, according to a report by IIFL, Patanjali is struggling in modern retail on account of poor servicing, increased presence in general trade, lower trade spends and a complex distribution structure.

Published on October 31, 2018

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