Why Anchor is struggling to find buyers

The oral care portfolio has been on the block for over a year now in a market where everybody wants to get in

In fast moving consumer goods (FMCG), India is a seller’s market, where any decent brand can find takers. The reason being that companies, both domestic and international, are keen to benefit from the growth that FMCG in general is seeing here.

According to sector analysts, the roughly Rs 170,000-crore domestic FMCG industry grew at a compounded annual growth rate (CAGR) of about 11 per cent between 2000 and 2010. But in the current decade, this growth has actually increased at 12 to 17 per cent, according to a Booz & Company study. By 2020, the study says the market size is estimated to more than double touching anywhere between Rs 400,000 crore and Rs 620,000 crore. Contributors to this growth will be increasing consumption led by rise in incomes and changing lifestyles.

Sector analysts say the rise of the rural consumer too is another reason for higher FMCG growth in the current decade vis-a-vis the last one. Rural India today contributes one third of FMCG sales and is likely to grow even further. According to a recent Nielsen study, small towns with a population below 100,000 have been key drivers of growth in the last 12 months alone.

There has been a mad rush for domestic brands in the last few years as no one wants to miss out on the action. Companies such as Reckitt Benckiser, the makers of Dettol, even paid an amount eight times sales to galvanize its presence in the country.

Against this backdrop, it comes as a surprise that brands such as Anchor whose oral care portfolio includes flagship Anchor White toothpaste, Anchor Gel as well as toothpowders and toothbrushes have hardly found takers despite being on the block for well over a year now. While the predictable argument is that valuations remain steep, persons in the know say that the reasons actually lie elsewhere. Buyers are increasingly becoming very choosy about the products they want to acquire or take control of. And Anchor appears to be struggling in that department.

Once a powerful brand that had share in double digits, Anchor’s market share especially of its flagship white toothpaste is now down to low single digits — in the region of about two to three per cent, according to persons in the know. Its fall, in a sense, has coincided with the rise of multinationals such as Colgate-Palmolive, which now has a share of about 54.5 per cent in the Rs 3,000-crore toothpaste market. Last year, between January and June, Colgate’s share was about 52.4 per cent. Number two player Hindustan Unilever (HUL), in the interim, continues to hover in the region of about 26-27 per cent in terms of share, while number three player Dabur has a share of about 13-14 per cent, market experts say.

A mail sent to Sanjay Shah, promoter & managing director, Anchor Health & Beauty Care as well as Sashi Nair, president, marketing, AHBC, elicited no response till the time of going to press.

But Abneesh Roy, associate director, research, Edelweiss, says that regional brands such as Anchor have suffered thanks to the onslaught of companies such as Colgate that have pushed distribution to smaller towns and cities and continue to innovate every step of the way. In a note on Colgate-Palmolive recently, Roy said, “The company’s volume growth is likely to continue unabated aided by rise in penetration as well as per-capita increase in consumption of toothpaste. A generic brand, huge customer acquisition initiatives and distribution are some of the reasons for Colgate’s success in the marketplace.”

Anchor, in contrast, has struggled to keep its innovation pipeline going after the initial burst when it was the first to use calcium phosphate, the key input that goes into making toothpastes, extracted from rock rather than bone ash. This was almost 10 to 15 years ago when Anchor also launched a huge marketing campaign promoting its product as a ‘Vegetarian Toothpaste’, finding users among those who did not touch non-vegetarian products.

Besides, Anchor was also available at a significant discount to Colgate and pushed combo packs that gave consumers both a brush and toothpaste together. While this did help Anchor in gaining share in the initial period, sustaining these initiatives has been difficult in an environment where costs have increased and competition grown.

In the last few years, say industry experts, there has been no significant marketing support behind the brand and visibility on shop shelves has come down. This has impacted sales. The last ad campaign for Anchor was in 2010 when the company launched a TVC with the baseline Daant fit toh life fit(If teeth are fit than life is fit). Before this, Anchor had used actor Kajol as its brand ambassador.