The hope is that a growing number of value-added toothpastes with higher price points could make the razor-thin-margin category more profitable for supermarkets.
The influx of new toothpastes continues to pose a merchandising challenge for retailers this year. There have been 75 new item entries into the category in the first nine months of this year alone, already exceeding last year's total of 54 item introductions, according to Tom Vierhile, general manager of Marketing Intelligence Service, Naples, N.Y.
"In the past, the medicine cabinet might have had one or two. Now there are four or five -- one for kids, one for the breath, one for tartar control, one for gum disease," said Vierhile. "And it has made the buying decision much more complicated and made it harder for retailers to merchandise."
New product introductions, "are already well ahead of last year and there are three months left to go. It may break 100. It is hard to say," said Vierhile.
In spite of these entries, according to Information Resources Inc., Chicago, overall toothpaste dollar totals remain flat, down 0.6% to $1.5 billion for the 52-weeks ended Aug. 24. Supermarket sales fell 2.1% to just $700 million.
"As far as the effect at retail, there is a lot of excitement," said Ronnie Williams, vice president of Millbrook Distribution Services, Leicester, Mass. "Almost all the new exciting stuff is premium-priced, so the opportunity for increased profit margin is certainly there."
Although increased consumption in the category is unlikely, he added, products offering new technologies or enhanced performance ingredients could bring an increase in dollar sales and margins.
"Manufacturers are doing what they can to spur growth of toothpaste through the introduction of the premium-priced products," he continued.
Meanwhile, category leaders Crest and Colgate, both have major launches this year -- Crest MultiCare and Colgate Total -- that could escalate into a toothpaste war, some industry observers contend. Colgate Total, to be launched in December, will be supported by a $100 million advertising and promotional program and is being billed as a product to revolutionize the toothpaste category. Crest has devoted $60 million for its MultiCare line.
"I think some of the smaller players will suffer from it," said Williams.
"[However,] I think people will pay more to try these new things. In the long term, if people like it and consider the enhanced performance of these products a true value, then they will continue to repurchase. But if they don't think they got that much value, they will return to the lower-priced products."
Retailers surveyed by SN agreed and said shoppers have become willing to spend more on toothpastes that promise improved performance.
"To many people, the new products will make a difference, but you are still going to have a certain number of people that still want [a plain] toothpaste," said Dale Green, health and beauty care buyer for Houchens Markets, Bowling Green, Ky.
"HBC in general is a good profit category, but toothpaste is a tough segment to get margin in. It is so competitive out there. The whole toothpaste category is," said Green.
Barbara O'Roake, HBC buyer for Hy-Vee Food Stores, West Des Moines, Iowa, said she too believes consumers are, "trading in their dollars for a more expensive toothpaste."
As shoppers reach more often for products with whitening ingredients and other disease-prevention properties, some subsegments, such as baking soda toothpastes, are beginning to suffer.
"The baking sodas have done poorly, and are leaving the category," said O'Roake. "Maybe it is the taste, maybe the texture, maybe because of the growth of other stockkeeping units. People are trading up and trying other things and different SKUs."
Much of the growth in the last year at Hy-Vee is in whitening pastes, said O'Roake, with Colgate and Aquafresh doing particularly well.
To some in the industry, toothpastes have moved beyond their role as a dental hygiene product and are now viewed as a cosmetic item, as well. But at Hy-Vee, "we don't promote it that way," said O'Roake. "It is still a health product."
Despite the focus on whitening, it is Colgate's new Total toothpaste, that has been creating an industry buzz.
First introduced in 1992 to foreign markets, the multipurpose product has recently received FDA approval to make the claim that it helps in the prevention of gingivitis, plaque and cavities. The product contains fluoride and the antimicrobial ingredient, Triclosan. It also offers tartar control.
The higher-priced toothpaste will be available in 4.2-ounce, 6-ounce and 7.8-ounce sizes.
"From retailers, we've gotten a very positive response on the Colgate Total. I think nearly all retailers will look to get this product in stores immediately for multiple reasons," said Williams of Millbrook. The $100 million promotional campaign will include freestanding inserts, sampling and advertising.
Houchens' Green predicts Colgate Total will have an impact on the category, "if the product performs as they say it does."
O'Roake of Hy-Vee said the retailer intends to heavily promote Total with Colgate's support, but couldn't reveal details of their promotional plan.
Right now, O'Roake expects the product to retail somewhere between $2.49 to $2.79 for the 6-ounce tube at Hy-Vee. But exactly how it is priced will be determined by what the competition does, she said.
"Colgate wants to keep it a premium-priced product. But like anything else, whatever Wal-Mart does, everyone else will follow. So it would be good if Wal-Mart wants to make a profit on this."
When asked what kind of margin they would be getting, O'Roake said, at the $2.49 price, "it would give no margin at all."
Byrd Food Stores, Burlington, N.C., is merchandising Crest MultiCare, but it is still soon to tell how well it will do, said Randall King, HBC buyer. It plans to bring in Colgate Total. But Byrd's best brand right now, in terms of dollar sales, is Aquafresh.
"It has surpassed Colgate and Crest," said King. "It is a premium item, but not really that much higher in price than Crest or Colgate, and much less than Rembrandt, which we no longer carry. And it is a good product." While the brand is frequently promoted, its average price is in the mid-$2 range, noted King.
King said there has been no need to expand space for the category, and he expects future growth to "come from the premium lines."
"We are looking at everything new," said Wyman Butler, HBC merchandiser for J.H. Harvey Co., Nashville, Tenn. "We are seeing these whitening products coming across the counter really frequently. It is just like every other product: When one company comes out with something, they all do," he said. So far, the chain has taken on all six SKUs of Crest MultiCare, and according to Butler, "It is doing really well."
