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The Rediff Business Special: Nikhil Faleiro

The Hindustan Lever-Colgate toothpaste war

The fracas between the two, one of the many long-running battles to gain ascendancy in the Rs 12 billion dental care market, erupted on August this year when Hindustan Lever launched another toothpaste from their stable. The new toothpaste, New Pepsodent, a relaunch of the old Pepsodent G and Pepsodent 2-in-1 promised consumers throughout the length and breadth of the country to do something which the other toothpaste brands could not do, namely clean more than any other toothpaste.

It was the advertisements that Hindustan Lever Limited launched that got the goat of its rival, Colgate-Palmolive: the advertisement promised consumers that it would get protection form tooth decay at 102 per cent more than any other leading brand in the country. Given that the country's consumers are often swayed by advertisements and press campaigns, the wording and the claims caused an immediate uproar. Colgate-Palmolive saw red at the Hindustan Lever attitude that "my toothpaste is better than yours" and geared itself up for a long and intense legal battle.

Crying foul, it initiated proceedings with the Monopoly and Restrictive Trade Practices Commission in early November, claiming that the offending advertisement by Hindustan Lever was misleading the consumers. Thundered Colgate-Palmolive Managing Director N Jayaraman, "The advertisements are a blatant attempt to gain leadership through any means." The MRTPC issued an interim injunction to Hindustan Lever, restricting it from comparing its product with other toothpastes.

The situation took a turn for the worse after HLL countered by issuing press releases on the MRTPC injunction and still holding forth the superiority of its product. Colgate filed two contempt pleas in the MRTPC against HLL pointing out that the Lever releases deliberately distorted the MRTPC's injunction besides advertising its product. Colgate has sought appropriate MRTPC action against HLL, its officers, employees, and advertising agents for the contempt committed.

Acting on the Colgate plea, the MRTPC on November 17 directed HLL to file a reply within three weeks. HLL has also been directed to file its reply to another injunction application filed by Colgate-Palmolive. The Colgate plea said: "It is submitted that millions of consumers are being misled into believing the distorted version of the order passed by this hon'ble Commission and that such unfair trade practice needs to be injected forthwith."

According to the Colgate-Palmolive lawyers, the claims made by Hindustan Lever on the research done by the latter to prove its product's superiority was done in a petri dish -- using a limited amount of sample taken from six people mouths after using the toothpaste. The lawyers say the sample taken by Hindustan Lever to determine the level of efficiency of the toothpaste was an extremely small one and only a few germs could be detected, thus invalidating the test.

Hindustan Lever, however, claims that its tests were carried out by the University of Leeds and University of Bristol, United Kingdom, and the University of Pittsburgh, United States, which proved the efficacy of the toothpaste and thereby confirming its claim that the New Pepsodent was indeed superior to other leading brands in the market.

There is undoubtedly much more than product superiority at stake. According to Jagdeep Kapoor, marketing consultant, HLL is pulling out all stops to ensure that it becomes the number one player in the market. "It has already tasted blood and it is not going to stop in its endeavours," he said. What has spurred Lever's thrust is the fact that its market share in the dental care market has grown from a mere five per cent in 1979 to an impressive 36 per cent today, whereas Colgate-Palmolive has been seen its market share decline from a dominating 75 per cent to a struggling 56 per cent.

One of the factors behind the stupendous rise of Hindustan Lever has been the company's ability to constantly innovate its products and continuously introduce new products, practically every week. Dalip Sehgal, marketing controller, Hindustan Lever, said, "Due to our constant new releases, the other companies feel threatened and that is why they are resorting to any measure (read MRTPC, etc) to stop us."

Another aspect is that Hindustan Lever latest market offering, New Pepsodent, is a direct attack on Colgate-Palmolive’s main brand, Colgate Dental Cream. The New Pepsodent from Hindustan lever is priced at an attractive Rs 17.50 and contains a chemical called tricolsan, a well-known germ fighter. On the other hand, the Colgate-Palmolive brand containing a similar chemical agent is the Colgate Total toothpaste, which is priced at an expensive Rs 32, practically double New Pepsodent's price.

Therefore, by keeping the pricing of New Pepsodent so low in the extremely price conscious Indian market, Hindustan Levers is trying to take on Colgate-Palmolive’s flagship brand, Colgate Dental Care, which contributes 45 per cent to Colgate-Palmolive's entire sales portfolio.

While Colgate officials readily admit that Hindustan Levers product is a superior product, it is the use of the "102 per cent" claim that has raised the hackles of the entire Colgate-Palmolive management team, and which saw the debate being dragged to the MRTPC courts, with both sides claim and disclaiming that their tests were superior.

The claim is also causing confusion in the entire marketing community. How did Hindustan Lever arrive at the 102 per cent figure? What did they use or is it just a figment of their imagination? The MRTPC judge, while restricting Hindustan Lever from further using the "102 per cent" in any future advertisements, has called for an independent body to test the veracity of the Hindustan Lever claim.

J D Singh, professor of marketing at Delhi’s International Management Institute, saw a motive in the advertisement. "Hindustan Lever's lack of explanation shows their desperation to sell a product they were not sure about," he said.

And while the entire oral health care industry awaits the final hearing, which is scheduled for December 10, there is no doubt that the wrangling between the two dental care market leaders is far from over. The question now is when will the next salvo be fired by Colgate-Palmolive, clearly perceived at the receiving end of Hindustan Lever aggressive marketing strategy and which is waiting eagerly in the wings to retaliate.

Till then, the entire country can enjoy the lull before another the next storm breaks out.