MUMBAI: Per capita consumption appears to be rising, leading to high penetration levels for the toothpaste category in India. This has resulted in higher volume growths for leading players, Colgate-Palmolive (India) and Hindustan Unilever (HUL) in the second quarter ended September 30, 2012 (Q2FY13). What has further enhanced growth and premiumization in the category is creation of new segments like sensitive toothpastes and mouthwash.
As the trend is expected to continue, industry analysts expect more marketing battles in the oral care market with advertising spends rising on this count, going forward.
Despite some effect of CSD (canteen sales department) slowdown (contributing approximately 6% of sales), Colgate clocked 10% year-on-year (YoY) growth in overall volume in Q2FY13. While its toothpaste posted a 11% YoY growth in volumes, Colgate's strongest competitor in the toothpaste category, Hindustan Unilever's oral care portfolio grew in double digits YoY (largely volume led) backed by robust growth in Close Up (re-launched in Q1FY13) and the Pepsodent brands (driven by premium range). On the other hand, Dabur's toothpaste category growth at 10.2% YoY was moderate due to Company's realignment in focus from volume to margin play. This resulted in under performance of its discount brand Babool (contributing approximately 50% of Dabur's oral care revenues). Its premium segment (Meswak and Dabur Red toothpaste) posted good growth,'' said a report by Edelweiss Securities.
Volume growth would also remain robust riding rise in both penetration and per capita consumption. Also, new categories like sensitive toothpaste and mouthwash will further enhance growth and premiumization. However, higher competition will induce Colgate to increase its brand spends, which could cap its margins,'' said the Edelweiss report on Colgate-Palmolive.
Colgate is India's biggest oral care products company with more than 95% of its sales coming from this product category. Colgate is market leader in oral care category with around 54.5% market share in toothpaste category.
HUL, the second largest player, had taken certain marketing actions to get back to competitive growth with the re-launch of Close Up. However, a report by Motilal Oswal on HUL, said, more needs to be done in oral care''.
Another report by Motilal Oswal on Dabur India said oral care remains a concern.
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