Procter & Gamble Co. (PG:US) is betting on one of Bollywood’s most popular actors to help it break the dominance of Colgate Palmolive Co. (CL:US) and Hindustan Unilever Ltd., which together control 73 percent of India’s toothpaste market.
The world’s biggest maker of consumer products, which started selling its Oral-B Pro-health toothpaste in mainly urban centers in India in June, is using Hindi-movie actor Madhuri Dixit-Nene to endorse the brand. By enlisting mother-of-two Dixit-Nene, 46, P&G is targeting all age groups, said Harish Bijoor, who advises companies on brands.
P&G’s success in almost doubling market share for its Oral-B toothbrush brand in Asia’s third-largest economy encouraged the Cincinnati, Ohio-based company to enter the toothpaste market that Colgate has controlled for 75 years, said Abhijeet Kundu, an analyst at Antique Stock Broking Ltd. Its plan to focus on cities, where rival Dabur India Ltd. (DABUR) estimates 77 percent of the population use toothpastes, may restrict sales growth, according to Kundu.
“To get to a market share of even 4 percent or so will be a Herculean task,” Mumbai-based Kundu said in an interview. “It will take at least two years for the brand to get established.”
Colgate has a market share of about 51 percent, while Hindustan Unilever’s Pepsodent and Close-Up dental creams control 22 percent of the market, according to Euromonitor International.
The task may get tougher after the $1.8 trillion economy expanded at the slowest pace in a decade, according to Nitin Mathur, an analyst with Espirito Santo Securities in Mumbai. Procter & Gamble Hygiene and Healthcare Ltd.’s profit growth slowed and Colgate’s Indian unit reported a drop in its net income for two straight quarters.
Hindustan Unilever (HUVR) reported a 15 percent increase in profit in the three months to March 31. India’s biggest consumer goods maker posted 270 billion rupees ($4.5 billion) of sales in the year ended March compared with P&G Hygiene’s 13 billion rupees in the year ended June 30, 2012.
P&G Hygiene’s shares, which have risen 6.4 percent this year, fell 0.3 percent to 2,930 rupees in Mumbai. Colgate-Palmolive (India) Ltd. advanced 2.7 percent to 1,356.7 rupees.
While P&G is selling Oral-B toothpaste in urban areas, Colgate is seeking to boost its presence in rural India as well. At least 329 million people, that’s more than the population of the U.S., live in India’s villages and small towns don’t use toothpaste, according to a May 28 investor presentation on Colgate’s website.
“There’s really a lot of headroom to grow in rural” areas, Prabha Parameswaran, managing director at Colgate, told analysts on a call on May 27. “Particular focus has been made in the last couple of years in driving rural distribution as rural incomes have been increasing.”
The per capita consumption value of toothpaste in India is $0.4, compared with $2.9 in Malaysia and $2 in Thailand, according to a June presentation posted on the Dabur website. Only about 42 percent of people in the nation’s villages and small towns use toothpaste, data show.
India’s urban consumers are upgrading to dental creams that soothe sensitive teeth and have whitening properties, according to Manjunath Reddy, a Bangalore-based research analyst with Euromonitor. That helped the market expand 19 percent to 53 billion rupees last year and may “allow P&G to leverage on the fact that consumers are continuously upgrading,” he said.
One out of six Indians suffers from sensitive teeth, according to Colgate’s Parameswaran. The company’s Visible White toothpaste, which is endorsed by 28-year-old Bollywood actress Sonam Kapoor, has been “delivering incremental shares,” she said.
P&G is selling a toothpaste that packs multiple therapeutic properties, Ross Strand, a research fellow at P&G said in an interview in Mumbai. The dental cream starts at 59 rupees for a 75 gram pack. The company will also sell two other cheaper variants, P&G said in an e-mail response.
Sensitivity is not a disease, and is a common dental problem that develops due to receding gums, vigorous tooth brushing and grinding, according to GlaxoSmithKline Plc’s website. Glaxo sells a toothpaste for sensitive teeth under its Sensodyne brand, and the British company has a 1.1 percent share of the Indian market.
P&G’s dental cream would have to provide a “functional improvement” over existing rivals’ products in order to get customers to shift, said Bangalore-based Bijoor. Most people tend to buy a particular brand and then stick to it for a long time, he said.
The maker of Ariel laundry detergent increased its toothbrush market share to 28.7 percent in 2012 from 16.3 in 2007, according to data from Euromonitor. Colgate’s share dropped to 28.7 percent from 29.1 in the same period, data show.
P&G is betting Dixit-Nene, who acted in box office hits such as “Tezaab,” “Parinda” and “Hum Aapke Hain Kaun,” will help the company replicate the success in the toothpaste market. The actor who returned to India after living in the U.S. for almost a decade, is a judge on the Indian version of the “Dancing With the Stars” reality television show.
The toothpaste was officially introduced at a glitzy event at Mumbai’s Shangri-La hotel with a four-minute long movie touting the benefits of the cream, after which Dixit-Nene appeared from a revolving door clutching a giant replica of the Oral-B tube. She wore a floor-length blue dress, matching the brands’ hue.
By choosing Dixit-Nene, “they’re giving a clue as to what their market really is like,” said Bijoor in an interview yesterday. P&G’s choice of a relatively older brand ambassador suggests that the company is targeting families and older adults, he said.
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