Colgate’s Ayurvedic Bet To Protect Turf Starts To Pay Off 

Colgate Palmolive India Ltd.'s offensive to protect domination has started paying off for India's largest toothpaste company.

Market share of the maker of namesake brand rose 40 basis points over the previous quarter to 52.7 percent in September, according to a report by SBI Cap Securities. That's the biggest jump in nine quarters and the first gain in five.

That came as the company aggressively pushed its herbal variants—Swarna Vedshakti and Cibaca Vedshakti launched in August 2016—to counter the challenge from Yoga guru Ramdev-backed Patanjali Ayurved Ltd.

Patanjali ate into the share of rivals with its Dant Kanti toothpaste, pulling along the ayurvedic market in the last two years. That even helped herbal products maker Dabur India Ltd. But Colgate Palmolive's share fell from the peak of 58 percent in April-June 2015 to its lowest 52.3 percent in the first quarter of the ongoing financial year.

To be sure, the company's market share jumped at least twice in the past two years, only to resume the slide. This time, Colgate Palmolive is far more aggressive.

The company is not only looking to protect its market in core brands but also gain share in “naturals” category, HDFC Securities said in a report after its July-September numbers. Though launched more than two years ago, it rolled out the herbal variants across India only in the previous quarter.

It also lowered prices of Swarna Vedshakti by 10-12 percent across all pack sizes, a Colgate distributor said on the condition of anonymity.

Swarna Vedshakti continues to drive the company's performance in the natural portfolio, JPMorgan said in a report. “The recent national rollout has received a good response and repeat purchases show positive consumer confidence.”

Colgate Palmolive, according to SBI Cap Securities, also increased spending on advertisement and promotions. And it's trying to increase its reach.

The toothpaste maker's sales teams have begun surveying the market to connect retail stores that don't stock its products with local distributors, the distributor quoted above said, adding that the company added 125,000 retail outlets to its existing network in Maharashtra alone.

BloombergQuint has yet to get a response from Colgate Palmolive to emailed queries.

Intense Competition

Still, it's early to say that the rebound will sustain because competition is only getting intense. That's putting pressure on pricing. The focus in the market has shifted to lower-sized packs, Sunil Duggal, chief executive officer of Dabur India Ltd., told investors in a conference call post the company's September quarter earnings. The Rs 10 pack was earlier a market dominated by Colgate's Cibaca and Dabur's Babul, but Patanjali's Dant Kanti and Colgate's Vedshakti are available at that price for the last two quarters.

“I think disruption actually came from the Ayurvedic players and whether it's Colgate or Patanjali, everybody is investing invasively at Rs 10 price points,” Duggal said. “That has caused some damage.”