Colgate India in sweet spot but Naturals segment poses headwinds
Naturals segment, constituting roughly 30 per cent of total market, may see reduced emphasis from company, says Emkay Research report
Colgate India has witnessed impressive growth in its toothpaste portfolio's MRP (maximum retail price) over the past three years, ranging from 10 to 18 per cent, with the exception of the mass-end Cibaca brand, which saw a more modest increase of approximately 5 per cent. This strategic move to grow its MRP aims to narrow the price gap between its products and those in other global...
Colgate India has witnessed impressive growth in its toothpaste portfolio's MRP (maximum retail price) over the past three years, ranging from 10 to 18 per cent, with the exception of the mass-end Cibaca brand, which saw a more modest increase of approximately 5 per cent. This strategic move to grow its MRP aims to narrow the price gap between its products and those in other global markets, according to an Emkay report. This significant growth, in contrast to the relatively muted 2-5 per cent price increase between 2013 and 2020, highlights Colgate's commitment to staying competitive.
Upon closer examination of the various toothpaste segments, it becomes evident that Colgate's pricing now positions it as a premium brand compared to most competitors. This shift aligns with the vision set forth by its global CEO, Noel Wallace, who focuses on scientific expertise and technical superiority in their product offerings, aiming to elevate the entire category.
However, the Naturals segment, constituting roughly 30 per cent of the market, may see reduced emphasis from the company. The primary concern remains the lack of structural growth, which fundamentally challenges Colgate's stock performance, says the report.
Since toothpaste penetration is approximately 85 per cent in urban areas and 75 per cent in rural regions, future volume growth hinges on converting non-users and existing users into regular, twice-daily brushers.