Magazine article Drug Topics

Dentifrices: Something New, Something Special

Magazine article Drug Topics

Dentifrices: Something New, Something Special

Article excerpt

D. P. Hamacher & Associates Inc., a Milwaukee-based management consulting company specializing in drugstore management tools, provided the material for this column. For further information, call the Hamacher firm at 1-(800) 888-0889.

Dentifrice sales in food stores and drugstores during the 12 months ended April 1995 totaled $1.23 billion, according to Towne-Oller & Associates, a division of Information Resources Inc. This is an advance of 3% over the previous 12 months. If, as estimated by other sources, mass-merchandisers control 21% to 24% of the market, total annual dentifrice sales approximate $1.6 billion.

Growth in this mature market will come mostly from population increases, dentists' influence on patients to brush more often, and marketers' success in getting consumers to buy technologically advanced products that cost more. Consumer buying habits projected from Nielsen North America's National Household Panel indicate that 89% of households already buy dentifrices. New items won't bring many new users into the category, but marketing efforts associated with the introduction of new items will influence which brands customers buy.

Products introduced in the past three years have changed the market. The $1 billion fluoride/tartar control subcategory has declined, while the much smaller premium-brand segment--$460 million in sales--has grown 44% since 1992.

According to Colgate-Palmolive, more than a third of current dentifrice volume has come from products less than five years old. Several of these helped create premium-priced specialty niches that were good for retailers. Rembrandt, Arm & Hammer Dental Care, and Mentadent are examples of brands that caught the attention of consumers and persuaded them to trade up from low-price/low-margin brands. This slowed the profit erosion caused by intense competition among both manufacturers and retailers.

In 1995, major launches by big marketers will definitely shake up the category but probably won't do much to improve profitability. Colgate-Palmolive and SmithKline Beecham have targeted specialty niches with Colgate and Aquafresh line extensions, Procter & Gamble is introducing a Crest that's clinically proven to fight gingivitis, and Warner Wellcome is bringing out a toothpaste under the famous Listerine name.

All these dentifrices are backed with enough marketing support to generate widespread trial, and all but one are priced higher than the category average. But even with these positive developments, it will be tough for retailers to build dentifrice dollar sales and profits. Some of these new products will draw sales away from the most expensive and profitable items in the category.

In particular, profits in the baking soda and peroxide subcategory are in danger of being flattened by the addition of Colgate Baking Soda & Peroxide. All Colgate SKUs of comparable size are priced the same, so Colgate Baking Soda & Peroxide 6.4-oz. size will retail for about a dollar less than Mentadent's 5.2-oz. refill.

Unit sales in the segment should grow handsomely. Low prices, the Colgate name, an easier-to-use package, and a $35 million marketing budget slated for the first six months of the launch will almost certainly persuade some consumers to try baking soda and peroxide for the first time. …

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