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Can Oral Care Keep Up the Pace?

By: Irina Barbalova, Euromonitor International
Posted: February 2, 2009, from the February 2009 issue of GCI Magazine.

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And Johnson & Johnson’s acquisition of Listerine mouthwash in 2006 is likely to help Colgate-Palmolive grow its Colgate Plax mouthwash business internationally if Johnson & Johnson fails to maintain its marketing efforts. These are not events management can depend on, and organic, internal growth seems increasingly hard to develop.

Immaturity in Emerging Markets Supports Value Growth

When compared to mature markets, emerging markets demonstrate more fluidity. And like the rest of the global cosmetics and toiletries market, oral hygiene marketers are looking to surging economic growth in Asia-Pacific and Latin America to buoy sales over the forecast period; these two regions are anticipated to see respective growth rates of 19% and 24% through 2012, compared to growth of 2% in North America and 1% in Eastern Europe.

Sales will be driven by consumers persuaded to trade up from less expensive national/regional products to global brands that marketers are throwing their weight behind. In Brazil, one of the most dynamic global oral health care markets, Colgate-Palmolive appears to be committing far more resources to its Colgate brand than to its market-leading mass brand, Sorriso—which saw toothpaste sales drop from 70% in 2005 to 67% in 2007. As a result of this general trend, both marketer and brand share are markedly more volatile in these markets.

Heavyweights Look to Niches

The global market remains dominated by toothpastes (which generated 51% of values in 2007), and most new product launches, appropriately, are in this category. The emergence of a number of new formulas and ingredients from niche producers with a more natural or organic positioning has been one interesting development. Alcohol, cetylperidinium chloride and saccharin are being replaced by ingredients such as fennel, mint, spearmint or horse chestnut, with marketers making functional claims for many of these new ingredients.

Leading manufacturers have leapt on this trend—leading brands Colgate, Signal and Crest all have herbal formulations—but there still remains a great deal of room for further development of natural ingredients. However, the scale and other products in these marketers’ brand portfolios often mean their “natural” positions appear untenable to consumers drawn to these claims and who typically choose smaller brands. In 2007, Colgate-Palmolive acquired Tom’s of Maine, a more premium-aligned natural marketer in the U.S. market with a significant oral hygiene offer; this is likely to set the future tone of market development from the big five brand owners.