Taking note from Ramdev’s Patanjali Ayurved, Colgate plans to launch newer products in 'natural' space

Mumbai: Aggressive growth of Baba Ramdev’s Patanjali Ayurved in the oral care segment has made market leader Colgate-Palmolive take note. Ian Cook, global CEO of the US multinational, has for the first time acknowledged competition in the herbal segment in India and said Colgate plans to launch newer products in the ‘natural’ space.
“The natural segment in India has been growing rapidly. And to capitalise on this, we’re revitalising our Colgate Active Salt toothpaste bundle,” Cook said in an investors’ call on Friday. “The shortterm share impact comes from local competitors with heightened promotional activity,” he said.

The Rs 6,000-crore toothpaste category reported merely 0.8% volume growth in 2015, largely due to severe slowdown in rural demand.

“We went through the innovation and go-to-market plans that are already being adopted in India to take corrective action against that short term slowdown, and we feel good about making progress over the balance of the year,” Cook said.

Colgate managed to maintain its market share that has increased to 54% now from about 48% nearly eight years ago. Its closest competitor Hindustan Unilever saw its share go down to 21% from 29% during the same period.

There is a visibly growing preference for the naturals segment that now accounts for 13%-14% of the overall market.

While Colgate does not have a sizeable presence yet in thissegment, its Colgate Active Salt Neem offering has garnered close to 1% market share within five months of launch.

Colgate said it is launching Colgate Sensitive clove essence toothpaste, and for children aged two to five, it plans a line of mild and safe toothpastes in fruity flavours.

Last week, Baba Ramdev had claimed Patanjali Ayurved had the potential to upstage leading consumer product multinationals, including Colgate and Nestle. “Colgate will be below Patanjali by this year, and in three years, we will overtake Unilever,” he claimed at a Patanjali Elicits ‘Natural’ Response from Colgate media conference, adding that Patanjali’s Dant Kanti toothpaste did Rs 450 crore of business in 2015-16. That’s nearly 12% of Colgate's annual revenues of Rs4,100 crore during last calendar year.

Analysts said the hype around Patanjali’s toothpaste is for real and Colgate is taking the threat seriously. The firm’s management committee regularly reviews the onground action plans to deal with competition from Patanjali and other herbal players such as Dabur and Himalaya, Richard Lui of JM Financial said in a recent report.

“Colgate appears quite confident that it will be able to protect and grow its turf, while cognising that this is not any ‘normal FMCG competitive battle’,” Lui wrote after meeting with Colgate’s management. “We, however, didn’t sense a confident plan that could prove a ‘definite winner’ for Colgate in this regard,” he said. Besides Patanjali Ayurved, other Indian herbal products makers, too, report growing demand. For instance, Dabur and Himalaya grew in double-digits in a consumer products market that expanded barely 6%.