Chinese Toothpaste Companies Seek Second Growth Curve
- Chaileedo Press
- Dec 29, 2022
- 4 min read
During 2019-2021, the market share of traditional whitening toothpaste continues to shrink, while the market size of strong efficacy and high premium functional categories such as gum care, anti-sensitivity and children's oral care continues to increase.
Dencare has been one of the key concerns of Chinese consumers in recent years. According to CHAILEEDO, the Chinese toothpaste market is expected to have sales of 115.5 billion yuan (about $16.6 billion) in 2022, with sales growing 12.7% year-on-year.
The market is also gradually attracting the attention of capital because of its large growth potential. Weimeizi, the parent company of Saky, formally filed a prospectus with the Hong Kong Stock Exchange in February this year. Recently, Lesening parent company of Chongqing Dencare Oral Care Products Co. Ltd. upgraded its prospectus with the Shenzhen Stock Exchange
Before, Chinese toothpaste market can be said to be lukewarm. Now it suddenly chased the capital market. So what changes in toothpaste companies? What are the current growth?
Yunnan Baiyao firmly ranks as the No.1 toothpaste
Looking back at the history of the development of Chinese daily chemical enterprises, China's domestic toothpaste brands had a moment of prosperity. With international brands entering the Chinese market in the 1990s, Chinese toothpaste brands did not escape the fate of being acquired, divested, or eliminated. Yunnan Baiyao, Lesening, Saky and Liangmianzhen become the few Chinese brands in the current oral care market. In recent years, as Chinese people pay more and more attention to oral health problems, the oral care sector is becoming a new battlefield for capital competition. Since this year, Saky’s parent company Weimeizi Industry (Guangdong) Co. Ltd. (hereinafter referred to as Weimeizi) and Dencare have embarked on IPO one after another since this year.
According to public financial data of four local toothpaste companies Yunnan Baiyao, Weimeizi, Dencare and Liangmianzhen, CHAILEEDO found that in addition to Liangmianzhen, revenue and net profit of the other three companies in the past three years have been growing steadily. Yunnan Baiyao firmly ranks as the No.1 toothpaste. Weimeizi's overall revenue is higher than Dencare, Liangmianzhen showed flat growth.
(Note: Yunnan Baiyao's financials are only for its subsidiary, Yunnan Baiyao Group Health Products Co., Ltd, which manufactures and sells oral hygiene products. Weimeizi's 2021 financials are as of September 30, 2021)
Nielsen retail research data show that China's toothpaste category market is relatively concentrated. Calculating toothpaste products in 2021 by omnichannel retail sales, the top ten manufacturers' market share accounts for a total of 75%, Yunnan Baiyao, Darlie, Procter & Gamble, Dencare (Lesening), Colgate and other top five manufacturers' market share are 59.50%. The head effect is increasingly significant. The market size of the head companies is more prominent and shows a good brand effect in the market.
CHAILEEDO noted that the oral cleaning care products industry category is becoming diversified and mature, other segments such as electric toothbrush, flosser, mouthwash, dental floss and other market growth should not be underestimated.
According to Euromonitor forecast, from 2022 to 2026, mouthwash will continue to lead the oral category, with a compound annual growth rate of 16.36%, to 2026 market size to 6.488 billion yuan (about $932 million), accounting for 9.57%. The electric toothbrush will grow into the second largest oral category after toothpaste. The market size will reach 13.255 billion yuan (about $1.9 billion) in 2026, accounting for 19.55% of the oral category. In these market segments, Canban, Usmile, Soocas, Panasonic, Waterpik and other Chinese and international brands have been the first to occupy the market. Although Yunnan Baiyao, Weimeizi and Dencare also deploy in this sector, the overall voice is not as good as other innovative brands.
Whitening toothpaste is not the first demand
Like cosmetics, the oral care market, especially toothpaste, has entered the era of efficacy. Gum care, whitening and anti-sensitivity toothpaste is the main category of consumer purchases with offline market share of 28.00%, 25.94% and 10.65%, respectively in 2021. As for other efficacy categories, children's toothpaste grew significantly, accounting for 6.81%.
In contrast, the market share of traditional whitening toothpaste continues to shrink during 2019-2021, while the market size of strong efficacy and high premium functional categories such as gum care, anti-sensitivity and children continues to increase.
According to Nielsen retail research data, in the background of the overall growth rate of toothpaste slowdown or even into negative growth, anti-sensitive toothpaste market share in 2017-2021 continued to grow, and the growth rate is higher than the toothpaste industry as a whole and whitening, gum care segmentation. In 2021, China's offline channel anti-sensitive toothpaste market retail scale reached 2.748 billion yuan (about $395 million), becoming the third largest offline segment of the toothpaste category market, with a market share of 10.65%.
It is worth mentioning that, as a wide-accepted Chinese brand, Lesening once became a synonym for anti-sensitivity in the toothpaste industry. According to the data disclosed in the prospectus of Dencare, the brand Lesening does occupy a large leading position in its segment. From 2019 to 2021, in the offline market sales of the anti-sensitive segment, the percentage of Lesening is 60.08%, 61% and 59.61%, ranking first in the anti-sensitive segment. The second-ranking is Sensodyne, with market shares of 23.89%, 23.8% and 26.06% respectively in the same period. It is not difficult to see that the advantage of Lesening in this segment is more obvious.
Yunnan Baiyao also mentioned in its 2021 financial report that the growth rate of the toothpaste category industry is slowing down, and the company has expanded from a single Baiyao hemostatic toothpaste to customized toothpaste for different people, as well as other categories of oral care products such as mouthwash and tooth flosser. Dencare also said in the prospectus, "vigorously innovate and develop electric toothbrushes, flushers and other electric oral care products, and actively expand oral hygiene products such as oral antibacterial cream and oral antibacterial care solution, as well as oral medical equipment products such as dental desensitizers."
It is not difficult to see that the local head toothpaste brands are trying to find a second growth curve in the market segment to face the increasingly fierce competition and changes in the oral care market. For Dencare and Weimeizi, seeking listing is a key battle for them to seek a breakthrough and gain more market power.
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