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Colgate is worried about Patanjali’s Swadeshi effect

Baba Ramdev promoted Patanjali Ayurved is giving multinational companies a run for their money. For the first time, US multinational Colgate Palmolive’s global CEO Ian Cook has acknowledged that Patanjali is a “tough competitor” in the Indian business space. Cook was talking to investors during an earnings conference call on last Friday (21 July).

Cook said there is a need to respond to “changing consumer preferences.” “Patanjali in India takes a very nationalist view of its business. They tend to be premium price oriented and it means that you have to respond with a very specifically constructed offering to consumer,” the Colgate Palmolive’s global CEO said.

It could be noted that Colgate India has recorded a fall in its market share last year. The share of Colgate India in Indian toothpaste segment fell by 1.8 per cent and the company’s sales volume declined by 4 per cent in the last fiscal. The shift of consumers to ayurvedic and herbal brands is the reason for the fall. Patanjali Ayurved is the main disruptor in the category.

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In 2016, Colgate India – which is still India’s largest oral care player – had a market share of 55.6 per cent in toothpaste category and is present in as many as more five million stores. However, Patanjali had garnered a 4.5 per cent market share in the toothpaste segment last year. But the Baba Ramdev promoted brand has managed to challenge the very dominance of Colgate despite being present only in two lakh traditional retail stores. Patanjali had forayed into the retail space with the Future group in October last year.

Patanjali Ayurveda’s sudden rise to a Rs 10,000-crore company in a very short span has made multinational rivals shift focus to Ayurveda sector. Targeting Patanjali’s Dant Kanti toothpaste, Colgate had launched its first India-focused Ayurvedic brand Cibaca Vedshakti last year.

“In the end the winner over time in these clashes are going to be the companies that best understand the consumer and serve them offerings that.  Of course that is what we all resourced and focused on doing,” Cook said.

It is significant to note that homegrown companies account for nearly 80 per cent products in natural personal care market in India. Brands using natural ingredients reportedly make up for more than one-fifth of India’s oral-care market.

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