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Toothpaste dictates development
Despite the fact that there are quite a few niches to be developed, overall oral hygiene growth is expected to remain dynamic in 2006. Consumption is gradually shifting towards more expensive products. It is expected that tooth whiteners to remain the fastest growing product type in oral hygiene.
In Russia oral care products make a substantial contribution to beauty industry. Oral care together with perfumery and make-up products are among the most popular cosmetics. Sales of oral hygiene contribute to 14% of total cosmetics and perfumery sales in Russia. To compare: in global cosmetics and perfumery market the share of oral care segment is not very high. The segment makes the least share (only 9% of the total cosmetics and perfumery sales worldwide), as compared to skin care (27%), hair care (21%), colour cosmetics (15%) and perfumery (11%), according to Kline and company.
Despite the fact that there are quite a few niches to be developed, overall oral hygiene growth remained dynamic in 2006. Growth sales rate of oral hygiene is expected to achieve 12% in value terms. The segment is supposed to reach $1’065 mln as compared to $951 mln in 2005. Consumption is gradually shifting towards more expensive products. Insignificant decline in growth from 12.6% to 12% can be explained by segment maturity. In 2005 toothpaste, which accounted for an estimated 75% of sales value, dictated the development in oral care. The same tendency took place in 2006. Also newly formed power toothbrush sales added an additional boost last year.
Another trend is that the newly-performed niches of power toothbrushes with removable units will also push the sales.
In 2006 tooth whiteners and dental floss were among the most dynamic in oral hygiene. Although Russian people tend to pay more attention to external beauty, and consequently premium and upper-mid-market products are in great demand, sales of tooth whiteners are expected to reach 537mln rubles (about $19mln) in 2006. The subsegment value is to grow by 13% in 2006 as compared to 2005. Though the growth is substantial, the sales seem to be not very impressive. One of the reasons for the low sales is that Russians are still prone to cure rather than prevent.
Dental floss value growth is to increase over 11% and amount to 477 mln rubles (about $17 mln) in 2006. In the late1990s the importance of flossing in order to thoroughly clean the teeth was highly promoted and multinationals started introducing the product. At first dental floss was mainly distributed via pharmacies. Today distribution is mainly the same with supermarkets and hypermarkets getting more important. However, consumers are still unaware of dental floss and not much advertising is done.
It is expected that tooth whiteners to remain the fastest growing product type in oral hygiene with annual growth about 10%. Consumer interest for this product is more likely to increase. This fact could be explained mostly by promotions and advertising of use of whitening products in the media. Dental floss and fresheners are also expected to enjoy further dynamic of annual sales growth about 9% and 7% correspondently. The major distribution channel for these products will remain pharmacies and drugstores.
Local producers have good value shares in oral hygiene. The total share of Nevskaya Kosmetika, Kalina and Svoboda, the three largest local players in the segment, is equal to 21% of the market. Major brands, such as 32 and Novy Zhemchug, are among the most recognized. They enjoy the highest consumer loyalty. Even thought multinational brands are among the most advertised, locally produced toothpastes have high recognition. Russian companies show a high launching activity. Recently, Avanta company has launched dental rinsers under trademark Ftorodent. Three products - Whitening, Healing Herbs and Protection from Caries – are offered at about $1 per item. At the same time Nevskaya Kosmetika offered Novy Zhemchug Green Apple + Whitening in laminated plastic tube of 100ml. The toothpaste is said to taste like juicy green apple, protect from caries and whiten.
Meanwhile there is an area where local companies have just begun to be involved in. The area is toothbrushes. Kalina and Nevskaya Kosmetika are not the only two manufacturers to offer manual toothbrushes. Recently Torn company launched therapeutic toothbrushes under the trademark 32 zhemchuzhiny (32 pearls). The series includes five brushes of various colour. The product is manufactures by contract with the usage of Tynex material by DuPont.
In general it is expected manual toothbrushes to continue to account for the largest proportion of sales within toothbrushes.
In the period January-August 2006 the total retail price growth in oral care segment was equal to 4.7% as compared to the same period of 2005 (ACNielsen). The prices for products made by Russian companies grew faster, than the prices for products made by international players. For example, locally made toothpaste costs 4.5% higher in the first half of 2006 than in the first half of 2005. The price for toothpaste made by international companies grew by 1.4% only.
DSM Group company conducted an analytical review of toothpaste in Moscow pharmacies. The results were published in distributing prices. In the period Aprel 2006 – March 2005 Lacalut by Arcam Gmbh (Germany) was unconventional leader in toothpaste sales value rating. The brand reported 60% share of the total sales value. Colgate (USA) took the second place, while President (Italy) gained the third one. Colgate and President have noticeably smaller sales value as compared to Lacalut (7.85% and 4.46% correspondently). Lacalut and Colgate take leading positions in sales volume rating as well. Blend-a-Med holds the third position. The brand overcame its close competitors due to massive information support in press and by TV. Russian companies held a small 5% share of sales value. Toothpastes under brands Novy Zhemchug by Nevskaya Kosmetika, Parodontol and Karimed by Svoboda, 32-norma, Grakosha and Lesnoy Balsam enjoy the highest awareness and consumption rates.
Remarkably toothpastes sold in pharmacies differ greatly by price. Rembrandt is the most expensive product, distributed at $12.5 per item. The most affordable toothpastes are Zhemchug, Semeinaya, Lesnaya, Parodontol.
The share of cosmetic products sold through pharmacies grows by 20% annually. Consumers eagerly make purchases in drugstores because they expect to have a professional consultation. A lot of people buy toothpastes in pharmacies. In Moscow the majority of them prefer international brands.
Competition between local and international manufacturers will continue to intensify in toothpaste, as local companies strengthen their positions and multinationals have to launch even more aggressive advertising. Local products improve in quality and especially in package and are expected to continue to manufacture more sophisticated products.
Eleonora Sakharova, deputy director of Central Scientific Research Institute of Stomatology
At present over 700 toothpaste trademarks are represented in the Russian market, by our estimation. In fact, we believe, the figure is much more, for Russian Far East market is hard to estimate. Toothpastes from all over the world are imported in Russia and local manufacturers keep abreast. Five oral care producers worked in the Soviet time. They had excellent equipment, though their products could not compete with international brands. The situation has changed since that time. A new normative legislation and certification requirements were implied. The norms were developed basing on ISO standards. Russian manufacturers improved their quality and marketing strategy. No other industry showed such impressive development as toothpaste production. At present there are 40 toothpaste manufacturers in Russia.
Tatiana Glukhova, manager of marketing communications for oral hygiene of GlaxoSmithKline
Toothpaste manufacturing and promotion strongly need cooperation with dentists. Industry researches testify the fact that the majority of therapeutic dentifrice is sold through pharmacies. Manufacturers work with dentists and the latter direct their clients to pharmacies. Russian people are well known to avoid often visits to dentists. In Russia a person would hardly go to a doctor just for an advice on toothpaste choice. That is why producers work with pharmacies as well. Pharmacist became the specialist to recommend an oral care product.