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Colgate Palmolive (India) Ltd. (COLPAL) Q4 FY22 Earnings Concall Transcript

COLPAL Earnings Concall - Final Transcript

Colgate Palmolive (India) Ltd. (NSE: COLPAL) Q4 FY22 Earnings Concall dated May 26, 2022

Corporate Participants:

Arvind Chintamani — Vice President, Marketing

M.S. Jacob — Whole-time Director & Chief Financial Officer


Richard Liu — JM Financial — Analyst

Amnish Aggarwal — Prabhudas Lilladher — Analyst



Ladies and gentlemen, good day, and welcome to the Colgate-Palmolive India Limited Investor Conference Call for the Financial Year 2021-2022. Please note that the conference call will include forward-looking statements. These statements are made on the basis of the company’s views and assumptions as of this time and are not guarantees of future performance. [Operator Instructions]

Joining us today from Colgate-Palmolive India Limited team is Mr. Arvind Chintamani, Vice President, Marketing; Mr. M.S. Jacobs, Chief Finance Officer; and Ms. Sujata Nairi, Associate Director, Commercial Finance and Investor Relations. Today’s session will begin with a brief presentation by the speakers, sharing the views on the overall company’s performance and strategy. This will be followed by the Q&A session.

I now hand over the proceedings to Mr. Arvind Chintamani. Thank you. And over to you, sir.

Arvind Chintamani — Vice President, Marketing

Thanks, Inba. Good afternoon, everyone. Hope you’re all doing well. You had a good day. And you and your families have been keeping safe and healthy. Welcome to the call. I’ll begin by drawing your attention to the Safe Harbor statement. And before I go into the presentation, remind us all that we are in the midst of a leadership change here at Colgate. We are extremely proud that Ram has been promoted to lead the newly setup Global Enterprise Oral Care for Colgate-Palmolive, another feather in the cap for us at Colgate India as Stalin continues to do well. And we are equally excited to welcome Prabha Narasimhan, who will join Colgate India as Managing Director and CEO, effective September 1. And we’re looking forward to having Prabha with us and she brings a rich and diverse experience and understanding across categories in this country and we’re looking for the new perspective to drive our growth ambitions. So welcome to Prabha.

With that, I want to highlight some of the key things that we are looking at across our business, starting with brand health, which of course is the most important thing for us to be focusing on to build a sustainable business. And the first measure is top of mind awareness. This is a really critical measure for us. It’s a measure of which brand are people thinking of first when they think of the category. And our top of mind brand awareness for Colgate stands at 71% in quarter one of 2022. This is 700 basis points above where we were a couple of years back.

And if you think about our trade structure in India, which is a mom and pop trade structure, the self-service trade structure where you can see the product, what is in the mind becomes the most important factor in what people ask for. So top of mind awareness is an extremely critical measure and we are growing strength to strength, and in fact, these numbers are the highest we’ve had in the last five years.

So very strong brand health over there and this reflects in behavior. If you look at the next number there, which is penetration, which is the percentage of people who bought us. Our penetration as Colgate at 88% is not only the highest in the oral care category, but is in fact the highest across all brands in India. Colgate is the most penetrated brand in this country and that makes us really proud. So strong brand health is the first key highlight.

In terms of financial metrics, you’ve seen these numbers, but we’re also very proud that we have crossed the INR5,000 crores threshold for this calendar year, it’s a big moment, with very strong gross margins at 67.1% and strong EBITDA above 30%.

On digital and analytics, we wanted to highlight the fact that Colgate is driving basket penetration for oral care on e-commerce. On the new and growing RE, we are showing leadership and we have driven the category forward across various e-tail portals. And on sustainability, which as you know is a very big commitment for us, we are extremely proud that this year saw Colgate launching recyclable tubes, the first, not only in the world, but also in India. And we’ve launched with recycling toothbrush, the first fully recycled toothbrush in the country as well, and I will speak to both these a little more as we go forward.

So these were the highlights. And we will use our strategic framework as the framework for the conversation today. You’ve seen this before. It’s our consistent framework to drive profitable growth with six pillars, and we will start with winning with brands. And when it comes to building brands, our master brand Colgate has a positive philosophy, which in Hindi is said as Dil Mein Umeed Jagao, Smile Karo Aur Shuru Ho Jao, and of course, we translate this into all the regional languages. And our rallying cry as a brand is to be a catalyst for optimism. We want to encourage people to think positively and believe that they can get over their hesitations and doubts if they can focus on the optimistic view. And we’ve been telling stories from around the country on optimism.

And I want to share with you our latest story, which is the story of Kiran Kanojia, India’s first female blade runner who went on to complete a marathon. It’s a remarkable story. And I’m really excited to start the presentation off by sharing the story. Can we please play the video.

[Video Presentation]

Smile Karo Aur Shuru Ho Jao. What a incredible story of an incredible person who reminds us again that if you can look at the bright side and persevere, anything is possible.

Moving from Colgate the master brand to India’s number one toothpaste, Colgate Strong Teeth. Seven out of every 10 households in India purchase a Colgate Strong Teeth product every year. And in terms of market share, Colgate Strong Teeth has more than 2 times the market share for any other toothpaste. So for us this is the flagship brand and continues to be. And if you go back in history, Colgate Strong Teeth started its journey in 2013. And we relaunched it once in 2007 and then more recently in 2019 where we saw double-digit growth on the back of the relaunch. And I’m really happy to announce that we are in the middle of another relaunch for Colgate Strong Teeth in quarter two of this year.

We are bringing to life the fact that strong teeth are the starting point of good digestion and good nutrition. And if your teeth are strong, you’re able to chew your food better that gives you the best from the food. And so strong teeth make a strong you. And our new reason to believe is calcium boost, which helps your teeth gets stronger. And this is the new packaging that’s out in the market, rolling out across the country. And we’re also very happy to announce that we have two fantastic stars partnering with us on this journey, Shahid Kapoor and Rana who are bringing this message to life across different parts of the country.

And with that, let me share with you one of these pieces of communication that we will be playing in a part of the countries. Can we please play the video.

[Video Presentation]

Only if your teeth are strong, you get the best nutrition from your food. And Colgate Strong Teeth with calcium boost makes your teeth stronger like no other toothpaste. I hope you enjoyed that.

And moving from India’s number one toothpaste to India’s number one toothbrush, and that’s Colgate Super Flexible, which is number one selling and the number distributed toothbrush in the country by a large margin. In fact, it’s more than 1.7 times the market share of the next toothbrush brand.

And as you can see on screen, Super Flexi is now in the market as of quarter two of this year in a new avatar. At the bottom, you see the new toothbrush in the dynamic new look and exciting new colors and a very contemporary modern packaging with the reminder that the ultra flexible technology continues to power the toothbrush. And critically, at the same price point of INR20, which is the heart of the category, making it accessible for so many people across the country.

Not only is the packaging exciting, the product inside has superior technology with the new bristle profile for enhanced cleaning, and of course, the handle technology that reaches all corners of the mouth. And we are very excited about this relaunch and we are putting behind it the might of the Colgate system. And this will be our largest ever in-store activation in the toothbrush category in terms of distribution and in terms of visibility. So huge initiative in this quarter with Colgate Dental Cream and with Colgate Super Flexible toothbrushes.

Moving on from Super Flexi to another critical part of our portfolio, which is naturals. And talking about salt, we all know that salt as an ingredient is the first ingredient that comes to mind in this country in our culture to take care of oral care problems as home remedies. We’ve all been told by our parents and our grandparents about the power of salt. And Colgate Active Salt for the last two decades has owned this space. We’ve gone from strength to strength and our brand strength continues to grow. In fact, Colgate Active Salt is the number one natural ingredient toothpaste in this country.

And to extend the strength of Colgate Active Salt, we have brought new avatars of Colgate Active Salt Neem for healthy gums and Colgate Active Salt Lemon to fight [Technical Issue] These are again available across channels as we speak. Very exciting innovations powering the salt franchise. And of course, we continue to support the Colgate Active Salt franchise as we’ve always done with top celebrities. We’ve got Samantha continuing the partnership with us in parts of the country and we’ve got Raima in parts of the country bringing to life the proposition that with Colgate Active Salt you prevent your dental problems and we continue to grow from strength to strength on this brand.

And staying with naturals, we are also continuing our growth journey on Colgate Vedshakti with a new product and a new piece of communication. This is our best ever Colgate Vedshakti product, and I will presently share with you the new communication. But we are backing this initiative with a lot of activity, including aggressive sampling across the country. And like you know, we have a regimen under Colgate Vedshakti with a Mouth Protect Spray, which is the number one selling on the go oral care solution in the market today. And we have Vedshakti Oil Pulling which brings to a modern format the ancient ritual of oil pulling together with Colgate scientific expertise.

And let us now please see the video of the relaunch for Colgate Vedshakti.

[Video Presentation]

Germs from your mouth can enter your body and Colgate Vedshakti stops them in the mouth. So that was the section on winning with brands. And now I’m going to drive into leading innovation and share with you some of our most recent launches. Our philosophy on innovation is on three-folds; bring technological superiority to the products that we launch, think platform out when we think innovation and not just singular products, and to look for new opportunities to innovate against.

And to start on technological superiority, we have put out a really exciting launch on toothpaste into the Indian market on whitening. Remember, that whitening as a benefit is the most searched benefit in this country when it comes to searches. People are looking to whiten their teeth. And we have with Colgate Visible White O2 launched the most revolutionary technology into the Indian market. This product has active oxygen technology that releases small bubbles of oxygen as you brush your teeth to lift away stains and to restore the natural white of your teeth, in fact, making your teeth whiter in about three days. And we have exciting communication that is out now across touchpoints.

And let’s see this video that features Dolly Singh, Toshada Uma and Prarthana. Let’s please play the video.

[Video Presentation]

Whitens teeth in just three days, revolutionary technology and an encouragement more than anything for young people to follow their own code on beauty and not fall for social norms and be confident of their smiles and be themselves. And it’s not just television advertising, we have put out — there is a host of communication as an integrated brand experience that we’re doing on Visible White O2 and across social media with influencers. We’ve seen some incredible feedback coming our way on this campaign and on this launch. Really, really exciting launch for us in this quarter and is continued to be supported throughout the year.

Moving from whitening to the space of therapeutics. The space of addressing problems in the mouth, conditions in the mouth. And the biggest problem in the mouth in India according to the Dental Council of India is gum problems. Not many people realize, but nine out of 10 Indian adults have some form of gum problems through a year. And to which, Colgate has launched Colgate Gum Expert with turmeric extract, which gives you relief from gum bleeding, which is a big problem. And if not corrected, can eventually lead to tooth loss. So really exciting launch on Colgate Gum Expert with turmeric, the only product out there of this kind and we’re seeing some really strong early response on the product as we are rolling this out in the country and it’s a launch that we are supporting.

And let’s see the communication that is going out and let’s play the video, please.

[Video Presentation]

The communication as you saw highlights the fact that people tend to ignore their gum problems, including bleeding gums and we’re encouraging them to take care of the problem early on with Colgate Gum Expert. And on therapeutics, we also launched, as you recall, Colgate Toothpaste for Diabetics. We all know that diabetes is a big [Technical Issue] 70 million diabetics and growing. But what most people don’t realize is that diabetics unfortunately tend to suffer a high incidents of oral health infections. And this product has been especially designed for mouth, which is suffering from these infections. Again, very strong reviews. We are getting very solid repeat feedback on this. And we are encouraged now to scale this up even further. We’ve tied with R. Ashwin and his dad, who has been a long-time sufferer of diabetes. And we are taking the message in partnership with the two of them across the country and educating people about the link between oral health and diabetes. And it’s a two-way link to take care of the problems in your mouth. We have a positive impact on diabetes management.

Let us see the video on this, please.

[Video Presentation]

Again, emphasizing the link between diabetes and oral health conditions and the special solution that Colgate exclusively has brought to market. We’re really proud of this [Technical Issue]

And moving from toothpaste to platform innovations and another iconic brand, Palmolive. [Technical Issue] has very high aided brand awareness, about 67% of people recognize the brand, a number that many brands would be really envious on. And when we asked people about what they think of Palmolive, they say it’s natural, it’s premium, it’s sensorial, and this had made Palmolive a leading brand in body cleansing. And this has given us the confidence to take the brand from body cleansing into the much larger category, in fact, 13 times larger of face cleansing.

And this year, we have entered with Palmolive the face cleansing category with a portfolio of products, which goes from foaming face washes, to gel face fortunes, to scrubs and masks and has some very unique ingredient combinations like Multani Mitti and Lavender Oil. We’ve got Chamomile Oil and we’ve got Tulsi, and really excited about the premium look, the packaging that we have brought and the extraordinary quality of the products that we have launched into the Indian market.

And not only are the products fantastic, as you will see as we take you through the communication, the brand is speaking in a fresh voice to the young modern Indian woman as we have realized that Indian woman very often end up placing themselves at the bottom of their to do list, right? We are reminding them that self love is not selfish. And Palmolive as a brand is telling them to say yes to you, encouraging them to put themselves on the top of their priority list. So let’s please play the video.

[Video Presentation]

Say yes to you with Palmolive face wash. And we have seen the [Technical Issue] launch and it’s giving us the confidence as we go forward and continue to build the Palmolive face franchise.

And moving from Palmolive to another platform innovation, this time on toothbrushes, with Colgate Gentle, which is a specialized very advanced manual toothbrush for different parts of your mouth, whether it’s for sensitive teeth or for enamel or for gum. We’ve got a range of products under the Colgate Gentle line that we launched over the last few quarters and we are seeing continued [Technical Issue] Colgate Gentle has now become the number one brand of toothbrushes within the sensitive segment of the toothbrush market, and we’re really proud of this growth trajectory.

And as we take this forward, we are communicating Colgate Gentle on different touchpoints. We have a new piece of communication that talks about the advancement of the toothbrushes, that you don’t need to make your toothbrushes hard for them to clean better. They can be gentle and yet give you superior clean. Let’s ask Brainy how that works. Let’s play the video, please.

[Video Presentation]

Your mouth is 80% soft skin. So get yourself Colgate Gentle. And so that was the piece on innovations.

Let me move on to digital acceleration, which is a key priority. And we have been putting out a lot of communication around the smiles, in social media on occasions like Republic Day or Rakhi where we remind people of the importance and the value of smiles. And what we’ve seen over time in social media is that people are increasingly organically talking about the Colgate Smile, right? And on the left of the screen are organic mentions of people mentioning Colgate Smile in their posts.

And when we started looking at the reach of these posts, we are finding that we are getting the potential reach of more than 250 million people from these organic posts in earned media every quarter. And it fills us with just immense pride that we are playing this role of owning smiles in our country. And this is really something to feel excited about as we look ahead at the brand and our business.

And it’s not just what we’re doing on social media with marketing brands, but also our partnerships with the large digital players on driving performance marketing through full funnel marketing or driving incremental rural reach. We know that there are many media dark parts of the country where we can now reach people with our brand messaging and we are doing that or driving regional content, right? This is something that is exploding. We’re able to tap into local influencers, partner with them and build local insight-based communication as we grow these partnerships.

And beyond that, on digital, we continue to also experiment. And D2C as a channel is an experiment that we’ve been driving. We started with electric toothbrushes with and we’ve seen some very strong early success for us. We’ve got orders from every state in the country in the last few months as we’ve rolled this out and our business is going from strength to strength and we’re seeing a really positive future for this D2C and others as we go forward, both from an effectiveness and from an efficiency point of view.

And all this of course to drive strength in our businesses. This is the trend on our e-commerce business, which over the last five years, you can see for Colgate on the left has grown and 10 times and continues to grow strongly. It’s about 5% of our business now and we are confident of the contribution of growth. And our shares on e-commerce are ahead of our offline shares. And over the last few years, have grown about 1,000 basis points. So great strength for the brand and for the business across e-commerce platform.

And apart from the strength of the business, it’s always really nice to see recognition coming from the outside. Lots of awards from very recognized industry bodies. And we’re really thankful for these awards and the recognition for the content work, the strategy work that we’ve been doing on digital within the company.

Going from digital acceleration to go-to-market and how we are strengthening this pillar, starting again with digital transformation. If you look at the right on smile store, what we’ve been doing is using AI tools to get the right product in the right store. We collect so much data from the direct stores that we are reaching — that we found that optimizing the assortment at a store level is giving us very solid incremental revenue gains. And over the last few quarters, smile stores has become a real positive contributor to our business and we’re going to roll it out and scale it up.

Apart from store level assortment, we’re digitizing distributor [Technical Issue] naturally to drive profitability for distributors. And we are also rolling out retailer loyalty programs to drive retailer loyalty across our categories. So lots happening on the digital front, but a lot happening on the traditional front. In rural, our Muskaan program continues to give us solid results in driving engagement and in driving visibility for our brands in wholesale.

And of course, at the other end of the spectrum, we continue to grow in strength in modern trade, drive engagement, drive assortment, drive premiumization. And as a result, drive our shares in this extremely important RE that continues to grow and we continue to drive a lot of advantages from. And not to forget our partnership with the dentist profession. We don’t often talk about this, but we have an exclusive range of products that we sell with the profession and that business is growing strongly. We are the number one prescribed oral care brand by dentists in India and we have very strong partnerships with the Dental Council of India and the Indian Dental Association and many of the regional bodies. So very proud of this as well.

And being consistent with our focus on being a catalyst for optimism. We are committed to re-imagining a healthier future. And on this front, you’ve seen our strategy of driving social impact at scale in millions of homes and preserving our environment. And we want to remind you to look out for our ESG report, which will be out in June this year.

And I’ve spoken to you and want to repeat it again that recyclable tubes are a reality after many years of serious experiment. We’ve got them on a part of our portfolio and we’ll roll them out across the whole. And with recycling toothbrushes, we’ve got a fully recycled toothbrush handle, bristles, everything. This is a first of its kind and it’s available in stores in our country now. So very exciting work on both these fronts.

We’ve also tied up with Mission Smile who are doing such amazing work with cleft surgeries. And we are committed to support them in growing support for doing more cleft surgeries and we are targeting to reach 1,000 children in this calendar year. And we continue our partnership with Seva Mandir in supporting digital and financial literacy for rural women, and the target there is also very strong 12,000 women in the calendar year.

Water is a strategic focus for us in our sustainability program and we know that we are a water stretched country. And solid numbers here, again, working with Seva Mandir and Water For People. Lots of [Technical Issue] 228 million liters of water replenished, 43,000 people benefited and scaling up that activity now to 77 villages. And our Keep India Smiling Scholarship program that we’re really proud of and Walking The Talk on Optimism, program we launched in 2018 together with ShikshaDaan, our NGO partner and with Buddy4Study, our tech partner, we are now upwards of 1,650 Keep India Smiling scholars across sports and education and community work.

And with that, I’m going to hand over to Jacob to take us through the rest of the presentation.

M.S. Jacob — Whole-time Director & Chief Financial Officer

Thank you, Arvind. Before I jump into the financials, I would like to make a mention of this wonderful award we received recently, the Audit Committee Award conferred by the Asian Centre for Corporate Governance, testimony to the quality of governance at the company. On the financials, our financial strategy remains unchanged driving top-line and volume, driving margins up, non-variable overheads down, advertising investment up and operating profit up.

So this is the Q4 results that you would have seen in the morning today. So we delivered about INR1,293 crores in net sales, 1.4% up and it was all driven by toothpaste. Toothbrush declined given it’s a little bit more discretionary in terms of consumption. Gross margins 66.6%, down 90 bps, but we are pleased given the level of inflation that we’re seeing in costs. Advertising continues to be at healthy levels as we calibrate between quarters, 11.3% for the quarter. EBITDA at 33.2%, marginally we are ahead of last year. And profit after-tax up 3% at INR324 crores.

On a full year basis, we finished at INR5,066 crores. That’s a growth of 5.3% and we are pleased to have crossed the milestone of INR5,000 crores in sales during the year. Gross margin, again, a healthy 67.1%. Advertising 12.7%. EBITDA 30.9%, which is 50 bps lower. That is driven by the lower gross margin. And profit after-tax about INR1,078 crores which is our focus here.

So if you look, one of the things that’s been helping us deliver reasonable levels of gross margin is what we call the RGM mindset. Five key pillars we use it. We use for the pricing, promotion depth, mix, pack size, new products. And we have [Technical Issue] and continuously look for opportunities to squeeze out benefit from each of these business. Net sales trend, healthy trend longer term. So this year 5.3%, coming over the 7.2% last year.

Moving on to the next slide, gross margins. So we’ve been able to retain most of the uplift we have seen in gross margin over the recent few years. So it stays at that 67%, 68% levels. And similarly, advertising stays at healthy 12.7%.

Going to the next slide. EBITDA PAT following the gross margin trend at very healthy levels. And similarly, we’re seeing profit at INR1,078 crores. EPS 39.6 and our stated strategy has been to give away most of the dividend, unless we have better use for that cash. And we’ve declared a dividend of INR40 per share.

So that brings us to the end of the prepared slide. And we will now move on to the Q&A section. Thank you for your patient listening.

Questions and Answers:


Thank you very much, sir. [Operator Instructions] Management members, we have received a question via text. I’ll just read it out to you. It’s from Nilay Shah from Moon Capital. His question is, since the past few quarters, Colgate India has been talking about accelerating volume growth with innovations, brand strength, etc. However, growth over the past many quarters have been even below that of the parent and indeed peers in India. Through the period, margins have been rising. What is the reason for this? And how should investors view growth and margins over the next one or two years?

M.S. Jacob — Whole-time Director & Chief Financial Officer

Yeah. As a company, we continue to stay focused on growth. That’s a big opportunity in the country. So Arvind took you through all the innovations we are delivering in the category. We bought — bring new and new innovations. On the premium side, you saw O2, you saw Diabetics, Gum, etc. We’ve got major relaunches of CDC, toothbrush, Super Flexi, etc. So we are continuing to focus on delivering top-line growth, but it’s also a reality that we are seeing the category is not growing right now. So that’s one challenge we are confronting with. And lot of it has to do with the macro impact of higher inflation, lower growth, etc. But we think we are in a good place. We are doing all the right things.

The margin is not a function of higher pricing — unreasonable pricing or pulling out advertising, etc. Our advertising levels continue to be very competitive. At the same time, most of our — a big chunk of our sale comes in INR10 and INR20 rupee packs where we are not changing the pricing. Pricing is restricted to the higher sales where elasticity is a little bit lower than for the lower packs. So — and you would also have realized that we have not passed on all the cost inflation. We’ve been very carefully calibrating the price increases also to make sure consumption is not impacted. But as we go through this period, we stay very optimistic and positive that as things get back to more normal levels, we will see that uptick.

Arvind Chintamani — Vice President, Marketing

Yeah. I’ll just add that when we think of growth, we must always look at the strength of the brand and where that’s headed. And as growth returns to the category, we see feel we’ll be in a very good [Technical Issue] because our brands have been strengthening. And as long as we continue to innovate ahead of the category, as you see, we are clearly whether it’s going into white spaces and building them and leading growth in segments like whitening or in lifestyle-related, therapeutic conditions like diabetes or in new places like face, etc., combined with solid brand strength and playing in new innovative spaces, while keeping the core business solid, we are well placed to exploit the growth as it comes going forward. So brand strength, very important to evaluate as we look at growth as well.


Thank you. We’ll take our next question, that’s an audio question, from the line of Richard Liu from JM Financial. Please go ahead. Mr Liu, could you please go ahead with your question.

Richard Liu — JM Financial — Analyst

Yes. Are you able to hear me?


Yes, sir. Thank you.

Richard Liu — JM Financial — Analyst

Okay. Thank you. Good evening, everyone. Sir, I just want to check one aspect, because what we noticed is that in terms of the growth that you reported for the quarter, I mean, your growth is actually lower than what the parent company reported at the global, and we are supposed to be a high-growth emerging market. In this context, if you can just throw some light of — on the kind of conversations that you typically have with the parent company in terms of the operating parameters that are most important for them? Is it absolute growth? Is it relative market share or does a good growth and profitability makes up for everything? If you can give us some insight on that will help us appreciate the performance better in that context. What according to them is a good performance from your side? What is the bad performance and so on? And yeah, so that’s really the question here. Thank you.

M.S. Jacob — Whole-time Director & Chief Financial Officer

Yeah. In terms of the priority for us, clearly, we’ve been identified as a country that’s expected to contribute to the overall growth of the corporation. Yes, the recent quarter was not the most encouraging one, but you will have to look at it a little bit longer term. We’ve delivered ahead of corporate growth for many years. The discussion with local teams, of course, the local leadership team runs it on a day-to-day basis has always been driving top-line growth. Sustainable profitable growth is a key pillar of the way we track the business, but it comes with the assumption that the top-line growth will be reasonable.

So we press all the right levers. We talked about innovation. We talked about advertising investment. We talked about pricing not being unreasonable. We talked about being competitive in every area in the market. So that’s been the strategy. At no point do we say that it’s — that profit number is a sacrosanct number and that’s above everything else. Really the top-line is a bigger priority for a emerging market like ours.


Thank you. Our next question comes from Percy Panthaki from IIFL. His question is, Naturals or Ayurvedic as a category has gained market share over the years, probably at the cost of the plain white toothpaste. Do you see the share of Naturals or Ayurvedic category continuing to grow or has it now stabilized?

Arvind Chintamani — Vice President, Marketing

Thanks, Percy. So what we’ve seen now for the last few quarters that the share of the Naturals segment has begin to ebb a little bit, it’s declined a little bit. So there’s a flattening and a slight reduction. In fact, what we call the Family Toothpaste segment, of which Colgate Strong Teeth [Technical Issue] has become the number one segment again in Nielsen. So we’re not saying and we’re not feeling by any stretch that Naturals as a phenomenon across categories is going to go away, it’s here to stay. But this very strong growth that we saw that was fueled further by COVID, we are beginning to see it wane for now.

That said, you’ve seen we are continuing to play in Naturals both the Ingredient Naturals through Active Salt sold as a franchise and through Ayurvedic Naturals and we think of both of them because we look at regional preferences and find differences, where also, we continue to look at the entire portfolio. And we look at our Family segment. You’ve seen the big relaunch on Colgate Strong Teeth coming through. And we think that whether it is Naturals to whether it is Family or whether it’s Therapeutics, it’s going to have to be innovation, constant innovation and communication within the cultural codes of different regions that’s going to gain going forward. We can’t keep doing the same thing and expect to grow, and that’s our core philosophy.


Thank you. Our next question is from the line of Amnish Aggarwal from Prabhudas Lilladher. Please go ahead.

Amnish Aggarwal — Prabhudas Lilladher — Analyst

Yeah, hi. I have a couple of questions. First being that — hello, am I audible?

Arvind Chintamani — Vice President, Marketing

Yeah, yeah.


Yes, you are, sir.

Amnish Aggarwal — Prabhudas Lilladher — Analyst

Yeah, yeah. So my question is regarding the — you can say, volume growth because our top-line has grown by, say, 1.4%. So what kind of volume growth we have, you can say, posted in this quarter and for the full year? That is one. Secondly, what is the quantum of price increase which we have undertaken, because I believe some of the products like, for example, Colgate Total, have seen sharp increase in the price, at least, you can say, at the MRP level? And the third question is that, what is the trend in the market share for our core categories?

M.S. Jacob — Whole-time Director & Chief Financial Officer

Yeah. In terms of the quarter, we’ve taken price increase in the mid-single-digit. So you can [Technical Issue] INR40 backing that out. On a full year basis, it’s more evenly balanced between the two. So that’s the kind of numbers we are looking at.

On your second question, I mentioned the price increase, the kind of levels. So we won’t comment on specific brands and what the pricing should be. We have models that show the elasticity at different price levels for different sub-brands and view the output of that 32 make those calls. Sorry, did you have the third question?

Arvind Chintamani — Vice President, Marketing

Yeah. And on market shares, Amnish, we are holding to the levels on household shares that we’ve seen in the previous periods.

Amnish Aggarwal — Prabhudas Lilladher — Analyst

And sir, what is the volume growth? Can you please repeat if I have missed?

M.S. Jacob — Whole-time Director & Chief Financial Officer

Yeah. For the quarter, what I mentioned was, we had pricing in the mid-single-digit. And you can do the math on volume.

Amnish Aggarwal — Prabhudas Lilladher — Analyst

Okay. And sir, finally, if you can throw some light on what’s the demand trend and what sort of outlook we can expect in the, say, coming, you can say, a quarter or two at least?

Arvind Chintamani — Vice President, Marketing

Yeah, Amnish. So you’ve seen across categories, there is a definite impact of the inflationary environment that we’ve seen more in rural than in urban. You’ve seen that for a quarter now. We do expect this to come back. We are optimistic about what we’ve heard on the harvest and on the monsoon and the efforts of the government on the investments for capex. So our belief is that we should in the back half of the year see demand strengthen for our category.

Amnish Aggarwal — Prabhudas Lilladher — Analyst

Okay, sir. Thanks a lot.

Arvind Chintamani — Vice President, Marketing

Thank you.


Thank you. Our next question is from the line of Akshen Thakkar from Fidelity Investments. His question goes as, are you comfortable with the level of gross margins? If one were to take a three to five years’ view, is there scope to increase this while increasing penetration levels? He has another question, which is, payers are growing faster now. What is the extent of market share loss? Could you quantify current market share?

M.S. Jacob — Whole-time Director & Chief Financial Officer

So I mean, the gross margin as a result rather than a target I would say of doing all the right things. So pricing is competitive. The environment in trade continues to be quite competitive. So we’ve been matching all that’s happening in the market. At the same time, we have a very successful program called the Funding The Growth program where we have cross-functional teams looking to take cost out of the system. And we continue to find innovative and smart ways to drive costs lower.

So combination of that and what we call Revenue Growth Management or RGM that I’ve referred to in my prepared slides, has helped us to grow margins just by pricing being, as I mentioned, on a full-year basis of volume and pricing cuts half on half. So it’s quite moderate levels of pricing. So I wouldn’t say that we are working on a target level of gross margin. It’s to do the right things that will help grow top-line and the margin will be what it is. So that’s on the gross margin piece.

On the share piece…

Arvind Chintamani — Vice President, Marketing

Yeah, I think we just said. So we are seeing on household shares — our shares holding at levels that we’ve seen in the previous quarters. Different segments go up and down. But at a overall category level, we are holding shares at levels we’ve seen in the previous quarters.


Thank you. Our next question is from Devchandra Ramani from Clovek Wealth Management Private Limited. His question is, if you can provide your comments regarding the penetration of oral care products, that is toothpaste and toothbrush, at an industry level? Classifying the same within urban and rural areas. Since the revenue growth has been tepid over the years, what would be drivers for top-line growth in medium to longer term?

Arvind Chintamani — Vice President, Marketing

So on penetration, Dev, at an annual level, there has been no change, that it’s a highly penetrated category in urban, fairly highly penetrated in rural. There are parts of the country where it’s still sort of in the 80s. But in most of the country, it is in high-90% levels of penetration. So penetration at an annual level still holding at very high levels. No change, and we don’t expect that to change. It’s hard to read penetration at a quarterly level, because if you don’t buy it in a quarter, you could buy in the next and you won’t get registered, but we’re not seeing any penetration declines.

Toothbrushes we’ve typically seen in slowdowns that people are able to delay their purchase, but eventually, even a toothbrush runs out. People do end up changing the toothbrush. So we see it recovering in the future quarters and that’s what we expect will happen on toothbrushes as well. In fact, right after COVID, we saw this trend. After the first lockdown, we saw people pushing out their toothbrush purchases. But in the following quarters, once things opened up a little, we saw a surge in demand. So no real alarms on the penetration level.

Growth, as we go forward, I think we’ve spoken to it. We see growth coming at different ends of the price benefit spectrum. We will continue to focus aggressively in this environment on the low unit packs, the INR10 and INR20. We will focus on our brands like Cibaca which are very strong in parts of the country where outlay sensitivities are very high and we’re going to consistently stay aggressive at that end. In the mainstream mass of the country where Colgate Strong Teeth from a toothpaste point of view and Super Flexible toothbrush plate, you’ve seen that we are being really aggressive.

We are taking actions within quarters at unprecedented levels. So continued focus on the core of our business and then on premiumization. We got to keep realizing that in times like this we got to be even more granular, even more analytical. There is no one Indian consumer, there is no one economics across the country, they’re not one preferences. So we got to be analytical and granular with our portfolio. And at the premium end, whether it’s with Visible White O2 or with Charcoal Clean or with Colgate for Diabetics or Colgate Gum Expert or with the Palmolive range or with the toothbrushes like Gentle and electric toothbrushes, we’ve got a constant stream of innovation that’s going to drive it.

We have a very simple philosophy that you’re going to grow either if you get more people to buy you or people to buy you more often or people to spend more on you, right? So what I just told you between the LUP focus, the premiumization focus and the innovation focus we tried to address these three parts of the growth equation.


Thank you. We’ll take our last question from Siddharth Bhattacharya from Anvil Wealth Management Private Limited. His question is, hi, what is your view on changing oral habits in India, urban and rural, primarily twice a day brushing?

Arvind Chintamani — Vice President, Marketing

Sure. So if we step back on oral health habits in India, it’s very instructive to realize that between 2010 and 2016, approximately in that range, the penetration of toothpaste in this country grew between — anywhere between 10 and 12 percentage points. And this growth was driven by Colgate where a lot of things we did from an education perspective in rural India and from a portfolio perspective, one of the key things was the free toothbrush that we drove across the low price point portfolio.

And so driving behavior change is something we’re very familiar with, not just in this country where we’ve done an enormous penetration building, but across the world where we’ve also done consumption building or brushing at night or brushing twice a day. And this is a space that we’ve been working a lot of pilots on in India. COVID did disrupt our plans, but we’ve been working with a few state governments and we’ve been testing a lot of plans. We continue to drive our Bright Smiles Bright Futures program and continue to communicate the importance of night brushing along with good healthy eating habits and using the right products and having the right way to brush.

So even through COVID when we couldn’t go to schools, we reached children digitally and educated them. So education continues to happen on this front. And we are looking for other ways in which we can add to that piece of the puzzle by doing other things. So plans are ongoing, some activities are on and others will get added as we go forward on this important initiative.


[Operator Closing Remarks]


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