MUMBAI (NewsRise) - The battle for supremacy in India's toothpaste market is set to intensify as Colgate-Palmolive will soon introduce a herbal product, the company's first such brand in its nearly 80 years in the country, to take on upstart Patanjali Ayurved founded by a yoga guru.
Colgate, which earns roughly 95% of its revenue from the oral care segment, has been grappling with a slide in market share in India, as Baba Ramdev's Patanjali lures consumers with its range of herbal products. A decline in consumer spending in rural areas, which account for 35% of its sales, has added to Colgate's woes.
On Friday, Colgate said it is planning to launch a toothpaste in the July-September quarter under the Cibaca sub-brand called Colgate Cibaca Vedshakti.
"In India, the consumer believes strongly in natural ingredients," it said in a statement. Colgate is positioning the brand as a toothpaste "packed with the goodness of natural ingredients to help keep dental problems away."
In the toothbrush category, the company said it is launching Colgate Slim Soft Charcoal Spiral, a toothbrush with charcoal bristles. The company didn't immediately give any details of pricing.
Analysts say Colgate's move reflects a recent trend, where home-grown brands are riding the "natural" wave to win customers from Colgate and Hindustan Unilever.
"Sooner or later, multinational companies had to react and respond to this threat by launching something on this platform of ayurveda and natural, which seems to be doing very well," said Pankaj Sharma, head of equities at Equirus Securities. "Multinational companies understand it's futile to fight a wave and the only way you can do well is by riding it with launches of your own."
Colgate-Palmolive, known for its namesake dish soaps and toothpaste, has been witnessing a gradual slide in its sales volumes growth over the last several years -- from 14% in the first quarter of fiscal year 2011 to barely 1% at the end of December. During January-March, the company's market share slipped 160 basis points on-year.
Patanjali, founded in 2006, had sales of 50 billion rupees ($749 million) in the fiscal year ended in March, Indian Express newspaper reported on its website on April 26. The company sells more than 350 products ranging from soaps to cleansers, supplements and noodles that are either made out of natural ingredients or are infused with herbs. The company positions itself as a brand based on traditional Indian medicines.
However, in the last few months, Colgate has been trying to revive its fortunes. In the quarter ended in March, the company's sales volume rose to 3%, aided by the increase in advertising and promotional spending. During this period, it also launched two toothpastes with natural ingredients--Colgate Active Salt with neem, and Colgate Sensitive with clove essence.
In a report last month, Deutsche Bank said it doesn't expect Colgate's volume growth to go back to the heydays of more than 10% expansion, amid tough competition from local rivals, as well as the high level of penetration in the oral care segment.
"Patanjali has a niche positioning, and its own loyal consumer base," Deutsche Bank said. "It will be a tough ask for Colgate to make a meaningful comeback in the naturals segment."
