Back to Basics

• In 2008, the lion’s share of sales were accounted for by toothpaste, and toothpaste was the only segment of oral care to emerge relatively unscathed, maintaining the same growth rate (4%) as in the previous year.
• The market left a lot of room for consumers to trade back down to nonvalue-added products as economic conditions worsened.
• Russia added $1 billion in absolute growth 2007–2008.
• Asia and Western Europe accounted for a combined 52% of the total $33 billion world oral care sales.
• With value sales of $6 billion in 2008, the U.S. remains the biggest single oral care market.
• In 2010, consumers will continue to focus on the basics such as toothpaste, but as consumer confidence returns, interest in all-around dental care should pique in emerging regions.

Oral care is proving to be one of the most recession-impacted categories in the beauty industry, despite its position as a staple part of the daily grooming process. The entire beauty and personal care market saw growth slide by one percentage point from 6% in 2006–2007 down to 5% in 2007–2008, while, according to Euromonitor International, the economic slowdown saw value growth for oral care at the global level dip to 4% in 2007–2008 from 6% 2006–2007.

Basic Oral Care Still Accounts for Greatest Sales

Despite the constant innovations and hype in oral care surrounding mouth fresheners and tooth whiteners, these actually only accounted for 1% and 2% respectively of the total 2008 global oral care sales. The lion’s share of sales are accounted for by toothpaste (51% of all world oral care sales in 2008) and toothbrushes (27%), according to Euromonitor. Indeed, it was the aforementioned mouth fresheners and tooth whiteners that suffered the most in the recession, with both experiencing value growth declines globally. Many consumers perceive these categories to be the most superfluous when it comes to necessary products for a good standard of oral hygiene, and many had no qualms about striking them off the weekly shopping list.

Toothpaste Keeps Up the Pace

Toothpaste was the only segment of oral care to emerge relatively unscathed, maintaining the same growth rate (4%) in 2007–2008 as the previous year. Times would have to be very hard indeed for most consumers to consider ditching toothpaste altogether, but it seems that even during hard times many are sticking to their preferred brand instead of switching to private label.

Discounting Hits

In the wider oral care market, the major global brands such as Colgate, Crest and Oral B also remained relatively untroubled by private label, which made modest increments in gaining brand share. The prevalence of discounting on branded products was one of the principal reasons behind this fact. Discounting and two-for-one deals have become commonplace in many regions. Although this practice is nothing new, price-conscious consumers have become less brand loyal and are increasingly opting for whichever brand happens to be offering the best price. The fact that a majority of oral care sales are made through grocery stores (62% of all oral care sales in 2008) does not help matters, as supermarket price wars mean that retailers have been keener than ever to compete with their rivals on price with products seen as essentials—and oral care falls into this area.

Did the Alcohol Mouthwash Scare Harm Product Sales?

In early 2009, mouthwash suffered a major PR setback after it hit the headlines that there was a possible link between the use of alcohol mouthwash and the risk of mouth cancer. Following the revelation, some brands reacted by removing their alcohol mouthwashes from sales. The Dentyl PH brand was immediately withdrawn from sale and hastily reformulated to make all its products alcohol-free. Although the strong dip in mouthwash value growth was caused primarily by the recession, the scare certainly did not help sales to remain solid.

Innovation; Higher Priced Brands Limit Damage to Growth

Some oral care manufacturers focused on new product developments to try to drive sales in the downturn. In April 2009, Colgate-Palmolive introduced the Colgate Wisp, a single-use mini-toothbrush designed to clean teeth on the go. The product capitalizes on the growing trend for time-starved consumers to clean their teeth during the working day in addition to their existing morning and evening dental routines. At approximately $2.40 for a pack of four Wisps, it remains to be seen how many consumers consider the convenience benefits to outweigh the price in comparison to carrying a toothpaste and toothbrush around with them.

Johnson & Johnson continued the on-the-go theme by launching 95 mL bottles of its Listerine Total Care and Stay White mouthwashes. The bottles comply with airlines’ 100 mL restrictions on liquids, making them also suitable for air travel.

The natural oral care category remains a small but growing one, especially in the U.S. and key Western European markets such as Germany. Players such as Weleda and Tom’s of Maine are driving sales. Often marketed as free from fluoride or other similar ingredients found in standard oral care brands, natural products often retail at least double the normal price.

Mature Regions Worst Hit

As with other areas of the personal care market, oral care sales took the biggest knock in the most developed regions. North America was the worst, where the rate of value growth slipped to just 1% in 2007–2008, down from 5% the previous year. Sales in Western Europe also dropped by one percentage to 3% in 2007–2008, and Australasia slid to 3%, down from 4% in 2006–2007. The primary reason for the drop in these markets: Consumer uptake of more expensive, value-added brands was already very high before the impact of the recession was felt. In Canada, for example, whitening toothpaste accounted for the lion’s share of toothpaste sales in 2008, with 39%. Standard toothpaste took just 7% of the market, according to Euromonitor International statistics. This left a lot of room for consumers to trade back down to non value-added products as economic conditions worsened.

Emerging Regions Boost Global Sales

Damage in the developed markets was partially offset by booming sales in emerging regions. In stark contrast to regions such as North America, the Middle East, Africa, Asia and Eastern Europe all saw an improvement in 2007–2008 value growth rates compared to the previous year. Eastern Europe proved to be the brightest spot for oral care, with a respectable 8% value growth 2007–2008. Ukraine and Russia were the main drivers of this performance, with Ukraine seeing a 15% rise in sales in 2007–2008 and Russia adding a cool $1 billion in absolute growth for the same time period. This meant that Russia accounted for 50% of the absolute value growth in Eastern European oral care. The country is experiencing a rapid rise in disposable income, and, as a result, consumers are continuing to trade up in most areas of oral care. Demand for electric toothbrushes (which are gradually replacing battery and manual toothbrushes) is particularly strong in Russia, with value growth of 19% in 2007–2008. The average unit price of toothpaste products has increased more rapidly as the market is flooded with numerous added-benefit products. In contrast to mature Western markets, the share of cheap unbranded oral care is gradually falling, with a shift toward more advanced products.

Western Europe; Asia Lead Regional Sales

In contrast to many other categories in which North America and Western Europe typically lead sales, oral care sales are dominated by Asia and Western Europe. These regions account for a combined 52% of the $33 billion total world oral care sales. Sales in Asia have been buoyed by China and Japan. In the latter, there is a growing demand across most segments of oral care because of a growing trend popular among workers to clean their mouth after lunch—thus increasing the average number of times oral care products are used per day to three times instead of two (as is the case in most other countries).

In China, the oral care market is strongly characterized by the country’s love affair with herbal medicines. Natural/herbal toothpaste is the leading type in China, accounting for 30% of total sales in 2008. Even leading brands such as Colgate have tailored their products to the trend, offering herbal toothpaste products, with exotic sounding ingredients such as lotus leaves and honeysuckle.

The U.S. Still the Single Biggest Oral Care Market

With value sales of $6 billion in 2008, the U.S., home of the perfect Hollywood smile, is still the biggest single oral care market by far. Sales in nearly all areas of oral care are strong in the U.S., as the routine of brushing and flossing is highly engrained in the psyche of the average American consumer. What’s clear is that tooth whiteners saw a decline of -7% in 2007–2008, a huge drop after the 13% growth spike in 2007. The flurry of new product launches in 2007 failed to translate to long-term sustained interest in at-home whitening products. Many consumers have found the at-home tooth-whitening process tedious and complicated, with many either unwilling to follow through with the treatment or use it again. Mouth fresheners have also taken a big hit in the recession (-14% in 2007–2008) as many cash-strapped consumers deemed the product superfluous to their overall oral health.

Sunny Outlook for Oral Care

Despite the current setback, Euromonitor International expects the long-term prognosis for oral care to remain favorable. Unlike other areas of personal care such as color cosmetics and fragrances—which could (in theory at least) be cut out altogether in times of hardship—in all but the very poorest countries globally, oral care will remain an essential buy for most consumers. In 2010, consumers will likely continue to focus on the basics like toothpaste and toothbrushes, but as consumer confidence returns, interest in all-around dental care should pique in emerging regions—meaning products such as dental floss and mouthwash should thrive.

Carrie Lennard is a research analyst at Euromonitor International.