BRIGHT WHITE

CHAPIN CLARK / Additional reporting: JOEL ELSON

The recent spate of premium toothpaste introductions has health and beauty care managers smiling, as overall dollar sales in the category have gone from a 1% decline to a 6.5% increase in less than a year.

Amid the successful launches of new multicare and antibacterial formulations -- especially Colgate-Palmolive Co.'s Total, now the No. 1 toothpaste variety -- retailers say the future looks brightest for the whitening segment, which already has seen the entry of a slew of contenders.

Two whitening toothpastes ranked among Information Resources Inc.'s Top 10 new HBC products in 1997: Colgate Whitening, with $37.6 million in sales, was No. 2, and Mentadent Whitening, with $18.9 million in sales, came in at No. 5.

Philadelphia-based SmithKline Beecham, maker of the Aquafresh oral-care line, specifically cited sales of its Aquafresh Whitening toothpaste in explaining improved overall margins in its consumer health division in 1997. The company introduced a new whitening gel last summer.

According to IRI, Chicago, Aquafresh is still the No. 3 toothpaste brand, with an 11.3% market share. Its sales of $179.6 million for the 52 weeks ended May 24 were up 8.2% from the prior year.

"Everybody seems to be gearing up to whitening," said Wyman Butler, nonfood merchandiser at Harvey's Supermarkets, Nashville, Ga. "Whitening has a lot of potential."

"The whitening segment will grow because people's appearance means a lot more today than cavity control, and the whitening customer is more concerned about whitening than any other thing that [the product] would do for his teeth," said Martin Lev, HBC director of the Key Food Stores Co-Operative, Brooklyn.

Verdie Henderson, HBC buyer for Minyard Food Stores, Coppell, Texas, agreed. "People are just wanting whiter teeth, and this is what's growing the category," she said. "People are going to whitening, and the next thing will be whiteners with tartar control."

Colgate introduced its Tartar Control Plus Whitening last August, followed by Procter & Gamble's premium-priced Crest Extra Whitening With Tartar Protection in December. Den-Mat's Rembrandt Dazzling White, Whitening Gel With Peroxide and Whitening Toothpaste With Fluoride for Canker Sore Sufferers, a 3-ounce tube of which retails for $6.99, all hit shelves last year.

"I'm pretty excited about these new whitening products; they are a lot more profitable," said David Himel, HBC buyer for Associated Grocers, Baton Rouge, La. "I see the whitening segment continuing to grow. It's evidently perceived as a strong consumer value and benefit."

Los Angeles-based Den-Mat, with yet another Rembrandt introduction, is banking that aging baby boomers perceive that benefit. Rembrandt Age Defying Adult Formula Toothpaste, which hit stores in April and is backed by a $15 million promotional campaign, claims that it "safely whitens teeth by several shades as it reduces cavities and plaque." It contains various whitening agents, including hydrogen peroxide, and is also supposed to help prevent gum recession, enamel erosion and dry mouth. A 4.5-ounce tube carries a $5.99 suggested retail price.

Rembrandt is currently the toothpaste category's No. 7 brand, according to IRI. The company's sales -- $47.8 million for the year ended May 24 -- are trending upward at a rate of 4.6%.

Sure to increase is the number of "all-in-one" products that claim not only to whiten but to fight cavities, tartar build-up, gingivitis, bad breath and any other oral ill a marketer can think of. In May alone, for example, the Food and Drug Administration's Dental Plaque Subcommittee met to discuss the safety and efficacy of proposed combinations of stannous pyrophosphate and zinc citrate; hydrogen peroxide, sodium lauryl sulfate, sodium citrate and zinc chloride; and hexetidine, soluble pyrophosphate, nonsaponifiable fraction of corn oil, bromchlorophene and chlorhexidine digluconate.

"Because the category is getting crowded, we've had to get rid of some smaller sizes of some items that we wouldn't have normally dropped," Himel said. "But the bar has been raised, and we've had to delete items that were doing well before."

"Stores have had to give up slower-selling selections to make room for premiums," Lev noted.

Butler, however, said Harvey's stores have grown their toothpaste sections to accommodate new entries.

"What we did to make room on the shelf is add another shelf to existing dental care gondolas in stores. We put in one more shelf in each 4-foot section, which created this additional amount of display space so that we didn't have to get rid of anything else."

Retailers disagreed about what all the stockkeeping unit juggling and shelf-space shifting means for their bottom line.

"The proliferation of these new products helps profits," Himel said. "Every time someone buys one of those and doesn't buy traditional Crest or Colgate, I love it, because we're making more money. In the multicare formulations, retailer margins are running between 14% and 18%."

Butler countered, "Despite premium-toothpaste products' higher retail prices, category margins overall have remained unchanged. These premium toothpastes are in the 4% to 5% range, while the category as a whole is still in an 8% range.

"Due to the premiums' higher retails, however, penny profits are definitely a little better."

Lev, citing the added promotional costs that go with a high-profile premium-toothpaste launch, said he has not seen a surge in profits.

"The retails for these premium products may be higher, but gross profits have come down, since we are very aggressive in introducing these new items," he said. "We promote them on a rotating basis in ads about every six weeks. The ads have reduced prices or mail-in manufacturer rebates, and if a rebate is as high as $2, [customers] will send it in."

Sandra Sage, HBC category manager at Genuardi's Family Markets, Norristown, Pa., said Colgate Total has been so successful it has snapped up a sizable chunk of other products' market share. "Total has been phenomenal, but as far as I can see, the category as a whole isn't up."

Indeed, of the Top 10 brands as ranked by IRI, five former category leaders -- Crest, Arm & Hammer, Listerine, Closeup and UltraBrite -- are experiencing declining sales. Fueled by the introduction of Total, No. 1 Colgate has surged ahead 32.9% to $390.1 million in sales over the last year.

Total notwithstanding, advanced formula doesn't necessarily mean advanced sales. According to The Motley Fool investor Web site, Enamelon was forced to tell investors last month that retailers have been hesitant to make significant stocking commitments for its new toothpaste with liquid calcium, which was launched in January. .... This came after an aggressive couponing effort to raise awareness of the product and to stimulate trials. Enamelon stock is now trading at levels 75% below its 52-week high.

And what of traditional toothpastes, the products that were popular before triclosan, Citroxain and other high-tech ingredients were introduced to consumers? Retailers say they're hanging in there.

"Consumers are still buying the traditional products. Value brands like Aim and Pepsodent are still doing quite well in our market," said Himel.

"We have a substantial amount of customers that still buy traditional branded toothpaste," Lev said. "I haven't seen a major drop in traditional-product sales."

Premium Buys

Premium toothpaste launches, Colgate Total and Crest Multicare foremost among them, have given the category as a whole a much-needed boost.

After a period of decline, dollar sales are up in all three major classes of trade, though, for the most part, unit sales are stagnant or declining. Consumers, it seems, are trading up.

Though supermarkets control the largest share of the market, mass merchandisers are grinning the widest. Their $535.2 million in toothpaste sales represents a healthy 12.9% increase over prior-year revenue.

TOOTHPASTE DOLLAR AND UNIT SALES

FOR 52 WEEKS ENDED MAY 24 (in millions)

$ Sales % Change Unit Sales % Change

FOOD $744.4 3.7% 311.3 0.0%

DRUG $306.6 2.9% 119.6 - 1.0%

MASS $535.2 12.9% 256.1 8.7%

TOTAL $1,586.2 6.5% 687.0 2.9%

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Source: Information Resources Inc., Chicago.