Mumbai: The war for dominance over India’s oral care market is now being fought in the ayurvedic toothpaste segment, in which companies are still raising prices, after reducing the cost of most of their other variants.
In a note on Colgate-Palmolive India Ltd, the country’s largest toothpaste maker, Equirius Capital compiled data to show that Colgate, Hindustan Unilever Ltd (HUL), and Dabur Ltd had slashed prices of most of their toothpaste variants since March 2017.
However, only Patanjali, whose ayurvedic toothpaste Dant Kanti has shaken up the oral care market, has kept its prices unchanged while Colgate has raised prices for only 1 of its many variants – the ayurvedic toothpaste Cibaca Vedshakti.
Colgate increased its prices by 15% for the Cibaca Vedshakti for the 175g tube to Rs55. However, at Rs314/kg, the brand is still priced lower than Patanjali’s Dant Kanti, which costs Rs400/kg at current prices.
Price change data in the note shows HUL slashed prices for its Close Up toothpaste’s variants by 5-22%, reserving its biggest hike of 16% for its flagship Red Hot gel.
Patanjali remained the only company that did not change prices of its toothpastes.
“Most of the drop in prices in toothpastes came in during the third week of July, after the GST (goods and services tax)," Sachin Bobade, senior analyst at equities brokerage firm Dolat Capital, said. “One reason why these particular brands are able to raise prices is perhaps they were priced at a lower base before the GST was implemented."
Under the GST, taxes on toothpaste have been placed in the 18% tax slab, a reduction of 7-8% nationally from the previous tax regime.
Meanwhile, ayurvedic toothpaste major Dabur cut the prices of its Babool toothpaste by 43%, but hiked it marginally for its Dabur Red portfolio, the data shows.
Yet, while Colgate is betting big on its ayurvedic brand, it remains a small part of the company’s overall business, a distributor for Colgate said. “Also, there is not much demand for this brand in premium, urban areas," the distributor said.
“As per industry reports, Patanjali has garnered a ~7.5% market share in the toothpaste segment," Dhaval Dama, analyst with Equirius Capital, said in the note. “Currently, the company is estimated to sell its products from ~0.5mn (500,000) retail outlets vs. >5mn (more than 5 million) outlets for CLGT (Colgate). Despite a smaller distribution network, Patanjali has gained market share from CLGT (~300bps over last 2-3 years)," he said. A basis point is one hundredth of a percentage.
Colgate-Palmolive lost share in the toothpaste market for the second consecutive quarter this year, Mint reported on 3 August, largely because distributors reduced inventory in the run-up to the 1 July’s implementation of GST.