India accounts for less than 4% of your global sales despite Colgate controlling half the oral care market here. Why?
India is one of our most strategic markets in the world. It’s our third-biggest oral care market. As we look at our 2025 strategy, we obviously are very bold on India. It’s also become one of our lead innovation centres for the world, not necessarily just in new products, but in technology applications and platforms. The other notable change in India certainly over the last five to 10 years has been that it has become an incredibly successful talent outpost. When you take talent, innovation, and growth, it (India) is where CEOs should be spending their time.
‘Volume growth also a priority’
When you think about opportunities in consumption, premiumisation, potential category expansion, and the incredible middle-class development that will occur over the next decade, there is no question that India can be and will be a much bigger subsidiary for us, particularly given the strategic importance we are placing on it. What’s important is that we get back to a real growth mindset strategy for India. So, the key for us is leveraging our scientific credentials as the world leader in oral care and figuring out how to develop and advance the market. A lot of that requires a mindset shift for the organisation to really think about being front footed in everything that we do. The average price of a toothpaste is still quite low in India. So, we have this real opportunity, as the middle class grows, to continue to premiumise. We (India business) should ultimately become a $1-billion subsidiary. That has to be the medium-term goal for us, and I have full confidence that the team and the leadership and the plans we have in place will continue to see category leading growth and that’s ultimately what our objective is.
How important is volume growth in India?
We have to have a balanced growth. It does nothing for me to grow through years of just dollar sales if I am not growing volume at the same time. Because, ultimately, volume is an indication that you are creating excitement in the market for people to use your products and use more of them. We call it the ‘three mores’ – more people, more volume, more money. That’s an important concept for us, to think about how we market in any country. And it ebbs and flows based on the opportunities and the type of innovation and our price points in toothpaste. For example, we compete at ultimate price point at Rs 10 all the way up to super, super premium. And it’s important that we are innovating across all price points in order to balance that volume and price…it is so critical to our P&L.Can India outpace other emerging markets in terms of sales?
It should, when you look at the expansion of the middle class in India and the per capita opportunity. Brazil as an example is in our top three. It has the highest per capita toothpaste consumption in the world. And we have been in that market for over 80 years. And we have been doing all the same things that we are really stepping up here now, which is really driving per capita consumption, driving premiumisation, and bringing unique innovation that deals with people centricity orientation in the market. If we can do those three consistently and not be distracted, I think India can obviously become one of our fastest-growing markets in the world.
Why was there a need for a player like Patanjali to tell you there is a large market for such products?
I would not call the Patanjali brand a natural brand. I would first call it an ayurvedic positioning and with natural ingredients. The difference for us is that we are a science-driven brand. We spend more money than any other toothpaste manufacturer in the world by multiple of three on clinical validation and science. And we have more PhD scientists working on our business than any other multinational in the world on oral care. So, our benefit is to stay focused on how we bring scientific credentials to the market. Patanjali was a distraction for us. It didn’t play to our strength. And rather than playing to our strengths, which is what we are doing now, we got diverted to that. Now we play naturals because we know how to play naturals. But the bridge from naturals to ayurvedic is a big bridge to cross to have that credibility. We want to bring products to the market that clearly bring scientific and tangible healthcare benefits to the consumer. And that’s where our differentiation is. The ayurvedic credentials that Patanjali has, we are not going to compete with that. That’s the core of what that brand stands for. We stand for science and technical superiority. That’s where we need to compete. We can tactically compete in some of these segments. And we should. But it shouldn’t be a strategic thrust for the company.
Can India drive global product innovation, maybe in the natural space?
The strong teeth brand in India is driving innovation and that’s one of our biggest businesses in the world. The science was developed in New York, but we validated and launched it to the consumer here in India. So, based on the development of the market, India will lead in innovation. And the good thing is, they will be able to pull a lot of innovation from certain markets around the world and develop it where it’s needed locally if required. I think where companies get distracted as you go into a market as big as India and you are not leveraging your global priorities, you tend to try to do everything on a local basis. That creates inefficiency, and ultimately doesn’t allow you to really dial up the innovation that you are doing on a global basis and leverage that locally.
Colgate had highlighted rural distress as one of the key reasons for volume decline. How is the situation now?
There are encouraging signs on both rural and obviously the urban market. It’s a combination of moving out of the Covid distress and more investment coming into the country. That has created more purchasing power in the rural market. There’s been more stabilisation of supply chains. So, I think that’s certainly helped the rural market become a little bit more vibrant. It’s showing positive signs for us right now and urban continues to be very strong.
What’s the most visible change in India over the past decade?
The digitalisation of the market has just been extraordinary. We have three service centres around the world, and one is located here. The ability to access great talent has been a big focus. The investment that India has made over the last decade is now manifesting into a significant amount coming in the digital space. So, the online market is growing very, very fast. There’s a lot of infrastructure for new platforms to be invested in here. China is a good proxy to watch, and it is the most advanced online market in the world. But it’s a very costly market to do business. So, I think the caution for India is ultimately ensuring that it doesn’t become too costly to continue to develop over time. My sense is the infrastructure here is terrific, and the opportunities are quite significant.
