Freshening a stagnant sector

The oral care market is dominated by two companies, but the market is saturated and growth is coming largely through new and niche products

Every household in the UK purchases oral care products. This is obviously good news for marketers selling toothpaste and toothbrushes, but it means it will be a challenge for them to drive growth.

According to Information Resources, the oral care market was worth more than &£550m for the year to October 6. The sector is dominated by toothpaste, which contributes just over half of all sales. Toothbrushes account for another 25 per cent and other products (mouthwash, dental accessories, denture cleansers and denture fixatives) combined account for less than a quarter.

Growth is slow at the moment in all segments but one in the oral care sector. The exception is mouthwash, which grew by 3.1 per cent over the period in question. The toothpaste market in particular is stagnant and its performance has a huge influence on the direction of the market as a whole. Consequently, the decline in toothpaste value sales about three years ago had a downward impact on the oral care market as a whole. This year, toothpaste had started showing year-on-year value growth, stuttering to a 0.1 per cent increase in July. It has since fallen back into decline.

Everyone who has their original teeth cleans them and, according to research from Taylor Nelson Sofres, they generally do so twice a day. But how can marketers drive growth? There seem to be three strategies: convincing consumers to clean their teeth more often; convincing them to spend more on what they currently buy, through premium-priced new product development (npd); or educating consumers to introduce new elements into their dental regime, thus developing smaller sectors such as mouthwash or dental floss.

The second option has been the route adopted by the toothbrush sector (covering manual and branded battery brushes). In the last five years, this market has grown by &£23m. Growth has been achieved by introducing premium npd, in the form of battery-powered brushes such as Colgate Actibrush and Aquafresh Powerclean Whitening.

Strange as it may seem, a key factor in the decline of toothpaste sales is the success of the new brushes. As they have smaller heads than conventional toothbrushes, less toothpaste is required for each brushing.

As with many markets where genuine organic growth is limited, promotional activity has grown. Combined with a backdrop of every day low pricing strategies, this has further removed value from the market. Promotions are so prevalent that over 40 per cent of all toothpaste by volume has been sold with some sort of in-store promotion in the year to October 6. So, reduced levels of toothpaste purchasing, combined with lower prices, have knocked &£20m off this market over the last four years.

It is not all bad news for toothpaste. The decline in sales has been balanced in part by excellent growth from a relatively new premium sector – whitening products. This was driven by the launch of Macleans Whitening and Colgate Whitening. These products captured consumers’ imaginations to such an extent that the sector is now the third-best selling toothpaste variant, behind regular and all-in-one toothpastes.

Manufacturers have not stopped there, however. They have combined the cosmetic benefits of whitening toothpastes with the deep-cleaning properties of “complete” toothpastes, launching the likes of Aquafresh Multi-Action Whitening and Colgate Total + Whitening.

In the mouthwash sector, the brands driving growth are medicated ones, such as GlaxoSmithKline’s (GSK) Corsodyl. This has benefited from a switch from pharmacy sales only to general sales, opening up new trade channels.

There are not many health and beauty markets of this size where two manufacturers control nearly 60 per cent of the market by value, but oral care is one of them. GSK and Colgate have almost 80 per cent of the toothpaste sector, as they control the four biggest-selling brands – Colgate, Macleans, Aquafresh and Sensodyne. While other manufacturers are strong in certain areas (Oral-B in brushes and accessories, Pfizer in mouthwash), only GSK and Colgate have all-round strength, with a strong presence in several sectors. All branded manufacturers are helped by the relatively low share taken by own-label products.

So what does this mean for oral care in the future? The big manufacturers are in a strong position to react to consumer changes, but what will those changes be? Will the cosmetic route, as taken by whitening toothpastes, become even more important for this market?

The ageing population will surely have an impact on sectors such as denture fixatives and denture cleansers. The key for these sectors with relatively low penetration, such as dental accessories and to a lesser degree mouthwash, is to focus on bringing in new users by encouraging them to diversify their oral cleansing regime.

Whatever happens, being the first to market will be a critical factor for success.


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