The strategies of going premium, targeting niches and acquiring new brands along the way seem to be working for Colgate-Palmolive when it comes to oral care products -- the latest being its planned acquisition of Hello Products.
Last week’s announcement that Colgate will buy Hello, the 10-year-old maker of premium-priced vegan toothpastes and mouthwashes, came less than a month after the company launched two vegan varieties of its own toothpastes in Europe under the Smile for Good brand.
Carrying the Vegan Society’s Vegan Trademark, Smile for Good appeals to people who are aware that toothpaste typically contains glycerin made in part from animal-derived oils. The products also come in fully recyclable tubes and are not tested on animals.
Hello’s products, which include adult and kids toothpaste, mouth rinse, toothbrushes and floss, are sold only in the United States -- primarily in food, drug and mass retailers and through ecommerce.
Research firm Innova Market Insights has seen strong growth in U.S. toothpaste launches making “free-from” claims regarding such substances as parabens and sodium lauryl sulfate. Thus category incumbents “are feeling some pressure to jump on that bandwagon,” vice president of strategic insights for North America Tom Vierhile tells Marketing Daily.
“It is going to be interesting to see how Hello and Tom’s of Maine, [which Colgate also owns,] can both prosper without one cannibalizing the other,” says Vierhile. “It’s clear that Hello has a great distribution deal with Target -- given how prominently the brand is shelved there -- and this may have played a part in forcing Colgate’s hand on this one.”
Oral care remains one of very few product categories where legacy brands can still dominate, thanks in part to longstanding consumer purchase habits. Last fall, Colgate’s global toothpaste market share was about 42%, while its U.S. market share was 34%.
At the time, the company had relaunched Colgate Total toothpaste in more than 100 countries, raising prices by 10% globally and 20% in the United States to reflect premium positioning. In a reflection of the continuing evolution of oral-care needs, Colgate Total SF (stannous fluoride) goes beyond just providing clean teeth to also affect breath, cavities, enamel, gingivitis, plaque, sensitivity and tartar.
During last year’s Super Bowl telecast, actor Luke Wilson of the HBO series “Enlightened” assumed the character of “close talker” to explain the benefits of Colgate Total to workers in an office setting by literally getting into their (chagrined) faces.
Premium is also part of the strategy for Colgate’s Optic White and Tom’s of Maine brands. In a call with investors last Nov. 1, president and CEO Noel Wallace alluded to “a great pipeline behind Optic White in terms of some of the innovation coming” in North America.
“Likewise, when you take the trend towards natural ingredients in the U.S., you'll see expansions across the Colgate portfolio as obviously a step up on our Tom's of Maine business as well, which we think will be important in terms of driving more premiumization in the North America business and driving more share growth,” Wallace continued.
While the treatment of tooth sensitivity is among Colgate Total’s attributes, it remains a stronghold for Sensodyne, which was a niche brand when GlaxoSmithKline acquired it in 2001. GSK decided that not enough dentists and consumers were aware of what causes sensitivity and how to treat it and thus began to educate the marketplace.
Those efforts have been so successful that Colgate complained to the advertising industry’s self-regulation watchdog, the National Advertising Division, that Sensodyne’s “#1 Dentist Recommended Brand” claim should be limited to “tooth sensitivity” or “for sensitive teeth.”
Last summer, the NAD ruled that Sensodyne’s claims are not misleading, noting “Sensodyne toothpastes hold a distinctive position in the oral care marketplace and product category.”