Oral Care: Major Players Launch Growth

MARKET REPORT Oral care: Major players launch growth-driving products USA Positive performances by all oral care categories led to market growth of 5% in 2007. Toothpastes and mouthwashes grew by 3% and 8% respectively, while whitening treatments posted growth of 10% – a turnaround from the decline of previous years. All categories have bene? ted from product launches. Education in the category continues to revolve around the link between oral care and overall health.

For example, Colgate-Palmolive partnered with health insurer Aetna and numerous drug chains to offer an education programme on preventive dental care and its link to general wellbeing. Also, in September 2007, GSK, the American Dental Association (ADA) and the ADA Foundation debuted the Oral Longevity programme, designed to increase oral health awareness in older adults. Market Review US • New products lead to growth in all categories • In? ux of products from foreign marketers • Technological innovation aids upturn of whitening strip sales Canada • Toothpastes and mouthwashes grow, while sales of whitening treatments are ? t Toothpastes Toothpaste sales grew by 3% in 2007. Products made with natural ingredients continue to be successful, according to industry sources. Private label sales are minor. In June 2007, the FDA advised consumers to avoid using toothpastes manufactured in China, as many that had been imported from the country were found to contain poisonous chemical diethylene glycol. Some of the counterfeits were falsely labelled as Colgate, but other major brands were not impacted and so the situation is unlikely to have hindered overall growth. USA and Canada: Oral care categories 2005-2007

USA US$mn Toothpastes Mouthwashes Whitening treatments Total Canada Toothpastes Mouthwashes Whitening treatments Total 163. 5 75. 9 32. 6 272. 1 173. 9 82. 0 30. 7 286. 5 178. 8 86. 9 30. 4 296. 0 2005 1,619. 1 721. 9 298. 8 2,639. 8 2006 1,635. 3 772. 5 265. 9 2,673. 6 2007 1,690. 5 834. 9 291. 3 2,816. 8 The competitive environment Crest continues to battle with Colgate for the category’s No. 1 spot. Crest grew by 8% and takes roughly a third of category sales. The growth was largely thanks to sales of its Pro-Health toothpaste, which more than trebled to reach $95mn. The presentation bene? ed from a category-leading adspend of $69mn. Crest Pro-Health tackles cavities, gingivitis, plaque, sensitivity, stains, tartar build-up and bad breath. Education about the brand informs consumers about the links between oral care and overall wellbeing. Meanwhile, industry sources stated that the Pro-Health Night arm of the range, launched in September 2007, has proved popular with consumers. It is positioned to tackle bacteria through the night. Source: Nicholas Hall’s Insight, sales via all retail outlets, full year 2007 (MSP), applies to following tables and references to sales data in the text unless otherwise stated.

Canadian data based on exchange rate of US$mn: C$mn – 0. 9870, published in the UK Financial Times on 1 January 2008 Simpli? yle 6 MARCH 2008 63 ORAL CARE Crest Whitening Plus Scope grew by 8% to $138mn. However, sales of Crest Whitening Expressions fell by 18% to $68mn. Crest Extra White Plus Scope was launched in September 2007 with the “Smile Bright in the Spotlight” competition, which offered the chance to host the People’s Choice Awards show with presenter Ryan Seacrest. P&G spent around $35mn advertising Crest Nature’s Expressions – introduced in April 2007 – which includes natural ingredients.

The brand is for consumers “who want to experience natural ingredients but whose preference indicates a strong loyalty to brands with established heritage” according to Diane Dietz, general manager of P&G’s North American oral care business. Crest Healthy Radiance Toothpaste System is available to consumers from March 2008. It comprises toothpaste and weekly deep clean strips, to strengthen enamel and whiten teeth. The system is targeted at women who want to achieve a healthy and attractive smile with one product. Sales of Colgate – which take around a third of category dollars – remained ? at despite the range being developed.

Growth may have been hindered, in part, by concerns over counterfeit toothpaste falsely labelled as Colgate, which was found in some discount stores in June 2007. In 2007, Colgate-Palmolive launched premium-priced Total Advanced Clean. It contains silica – to polish teeth – and an antibacterial formula that creates a protective germ? ghting coating. The launch was supported by professional sampling and advertising featuring actress Brooke Shields. Also, in April 2007, the Max Fresh range was extended with Burst presentations, infused with “50% more breath strips” than the regular version, according to the company.

A+P review: Leading US oral care adspends 2007 Brand Marketer US$mn Crest Listerine Colgate Aquafresh Rembrandt Sensodyne Arm & Hammer ACT Orajel* SmartMouth P&G McNeil / J&J Colgate-Palmolive GSK Personal Products / J&J GSK Church & Dwight Chattem Del Laboratories Triumph Pharmaceuticals 204. 1 97. 1 55. 8 46. 1 22. 0 19. 2 13. 2 8. 6 4. 5 4. 2 *Toothpaste only. Does not include adspend for oral pain SKUs Source: TNS Media Intelligence, 12 months to 30 September 2007, taken from the top 50 adspends of dental care presentations. Applies to all references to adspends in the text

It was supported with an adspend of close to $8mn and promoted by Hispanic musician Tito el Bambino. GSK offers Aquafresh and Sensodyne. Aquafresh – which takes around 8% of category dollars – grew by 10% to $142m. This was aided by three product launches – Aquafresh Advanced is positioned as a multi-bene? t toothpaste, while Iso-active creates microscopic bubbles during brushing that penetrate hard-to-reach areas. Lastly, Aquafresh White & Shine was launched in 2007 and carries claims not only to whiten, but also to contain microbuffers that polish teeth.

After an initial bout of consumer interest surrounding its launch in 2006, Aquafresh Extreme Clean declined by 13% to $42mn. Sensodyne sales were ? at at $76mn. The brand’s two most recent additions, ProNamel and Full Protection, were supported with adspends of over $16mn and nearly $3mn respectively. The rest of the line has been repackaged. Following Colgate-Palmolive’s purchase of Tom’s of Maine in 2006, its toothpaste range has grown by 6%, fuelled by ongoing demand for natural products. Packaging has been updated to make the speci? c bene? s of each toothpaste clearer. In December 2007, Natural Clean & Gentle toothpastes were launched, including SKUs for whitening and dry mouth. Sensitive Care Antiplaque toothpaste is IRI market facts: US OTC oral care 2007 (RSP) Category Toothpastes Mouthwashes Whitening treatments Sales $mn 1,260. 4 684. 0 242. 3 % change +2. 9 +8. 4 +11. 0 Source: Information Resources Inc, sales in food, drug and mass merchandise outlets (excludes Wal-Mart), 52 weeks to 30 December 2007 Simpli? yle 6 64 MARCH 2008 MARKET REPORT Paediatric presentations

There were several developments in OTC oral care for children in 2007. Colgate-Palmolive, which markets a range of paediatric toothpastes, partnered with Reading is Fundamental to offer the “Healthy Bedtime Habits for a Lifetime” programme, in which families can use online tools to create a bedtime rituals log. Vi-Jon Laboratories has launched Inspector Hector. The brand comprises two products – Inspector Hector Plaque Detector, a pre-brush rinse that turns plaque blue so that children know where to brush, and Inspector Hector Tooth Protector, a ? uoride rinse.

Meanwhile, Dr Fresh recently launched Fire? y MouthSwoosh, which has a light-up timer cap that ? ashes for 30 seconds, the recommended amount of time to use the product each session. In April 2007, all bottles of McNeil / J&J’s Listerine Agent Cool Blue rinse were recalled after it was found that the product’s “preservative system [was] not adequate against certain microorganisms”. The company is re-entering the paediatric market in March 2008 with Listerine Smart Rinse, an anti-cavity ? uoride rinse. In terms of toothpastes, Aim Kids for 6-10 year olds was launched in July 2007.

Unlike many paediatric toothpastes, the brand does not use a licensed cartoon character, which enables Church & Dwight to maintain the low pricing of the value-based range. Meanwhile, Crest has extended the trend of unusual ? avours to its children’s Wild Expressions toothpaste, with Burstin’ Bubblegum and Cinnsational Swirl. another new addition, to be rolled out in the ? rst half of 2008. Both new ranges contain patent-pending ingredient glycyrrhizin, from puri? ed licorice, which provides a natural foaming experience, according to the company. Church & Dwight ? elds Arm & Hammer, Mentadent, Aim and Close-Up.

The company is set to launch Arm & Hammer Age Defying toothpaste in 2008, which is positioned to strengthen teeth and repair damage caused by whitening products. Rembrandt sales were ? at in the reporting period. The brand was relaunched and repackaging following its purchase by Personal Products / J&J from Gillette in October 2005. Its A+P targets young people, using a traveling store that hosted makeover parties and concerts. Availability of Pierre Fabre’s pharmacy toothpaste, Elgydium, is being extended to the US by the French company’s US subsdiary, Sante Active.

Elgydium whitening and anti-cavity toothpastes, plus four toothbrush models, will be sold in pharmacies and online. Swedish cosmetic company Ori? ame has also made a foray into the US oral care market with OptiFresh, a toothpaste formulated with sea algae rich in zinc, iron, calcium and phosphor that helps “remineralise” tooth enamel. Other launches include BreathRx Sensitive Formula (Discus Dental) and Healthy Teeth & Gums toothpaste line (The Natural Dentist). Prospects Natural products and ? avouring innovations are set to remain popular. Industry insiders cite toothpastes with multiple bene? s and products positioned for the ageing population as drivers of future growth. Mouthwashes Mouthwashes continue to perform well, posting growth of 8%. Private labels claim around 11% of sales and grew by 5%. Niche products are partly responsible for the overall growth, as more breath fresheners and dry mouth presentations have been launched. Additionally, innovative positioning, such as extolling the bene? ts of using mouthwash at night, has proved successful. In company news, Chattem announced in May 2007 that it was to acquire the rights to ACT mouthwash in Western Europe and trademark rights worldwide.

Prior to this, Chattem acquired US rights to ACT from J&J, which divested the brand as a condition of its buyout of P? zer CH. The competitive environment Listerine takes half of category sales and managed 7% growth. The launch of Listerine Tooth Defense – in March 2007 – added $21mn sales to the brand. The ? uoride Simpli? yle 6 MARCH 2008 65 ORAL CARE rinse strengthens teeth and prevents cavities, a departure from Listerine’s usual positioning of reducing plaque and gingivitis. This was a welcome boost, considering a 13% decline in sales of Listerine Whitening to $44mn.

McNeil spent $97mn on press, radio and TV ads for the brand. The company also markets Listerine PocketPaks. P&G’s collection of Crest mouthwashes generated $104mn in 2007 and grew by 35%. Crest Pro-Health Rinse increased by 16% to $80mn. As with the ProHealth toothpaste, the rinse has been extended with a nighttime presentation. Meanwhile, sales of Crest Whitening Rinse trebled to $24mn in 2007. P&G also ? elds Scope, which posted a decline of 6%. The launch of Scope White mouthwash, which has been promoted with TV ads, may revitalise the brand.

Declining sales of ACT’s core presentation were offset by the strong performance of ACT Restoring mouthwash. Chattem launched a 33oz version of ACT Restoring in March 2007. The larger bottle has a lower ? uoride dose compared to the original 18oz size (? uoride sodium 0. 02% vs ? uoride sodium 0. 05%). This is owing to regulations limiting the amount of ? uoride allowed in a single bottle. As a result, consumers are instructed to use the 33oz version of the mouthwash twice a day as opposed to once. The brand is supported by year-round TV, press and in-store ads.

ACT was formerly part of Personal Products / J&J’s oral care portfolio, which includes the Reach dental accessories range. When J&J owned both of these brands, a version of the mouthwash called Reach ACT Restoring was available but following ACT’s divestment to Chattem, SKUs under this name are no longer in production. BreathRx – launched in 2006 – grew by 81% to around $8mn. Discus Dentals has added Sensitive Formula Mouth Rinse to the range, along with numerous new SKUs including toothpaste. The new products are formulated with trademarked ingredient, Zytex, which contains thymol, eucalyptus oil and zinc.

Meanwhile, the TheraBreath Starter Kit was rolled out by Dr Harold USA: Mouthwash / rinse shares 2007 Listerine 50% McNeil / J&J Crest 13% Procter & Gamble Scope 7% Procter & Gamble ACT* 4% Chattem Colgate 2% Colgate-Palmolive Biotene 2% Laclede Others, inc PLs 22% *excludes $14mn sales of Reach ACT Restoring • • • • • • • Katz in January 2008. Each box contains TheraBreath rinse, toothpaste, ? oss strips, chewing gum, dry mouth breath mints, a tongue cleaner and a Fresh Breath Guide. The kit was promoted with “Try Me Free” rebate offer.

Additionally, the Healthy Gums Oral Rinse formula (The Natural Dentist) has been updated to contain 100% natural ingredients. The company is extending the brand with an anticavity ? uoride rinse in April 2008. Alva-Amco’s Theradent has been extended with a teeth desensitising oral rinse – the ? rst OTC rinse to treat oral sensitivity, according to the company. SmartMouth (Triumph Pharmaceuticals) is also available. The National Advertising Division recently substantiated Triumph’s claim that SmartMouth “prevents bad breath for 12 hours (12 x more than any competitor). In terms of dry mouth rinses, Biotene rinse grew by 16% to $16mn. This was partially owing to the introduction of Oral Balance Liquid in 2006, which is packaged in a squirt bottle for convenience. GSK competes in the segment with Oasis mouthwash and mouthspray. In April, DiabEase Dead Sea Mineral mouth rinse (Masada Health & Beauty Corp) was launched, to ease dry mouth and oral symptoms associated with diabetes, while Rain Dry Mouth Spray (Xlear) followed in July. Sales of antiseptic oral cleansers have suffered. GSK’s Glyoxide declined by 57% to under $5mn and Colgate Simpli? yle 6 66 MARCH 2008 MARKET REPORT

Per-Oxyl fell by 8% to $9mn. Such products have strong competition from high-priced speciality items that incorporate new technology, such as canker sore discs (see Market Report, November 2007, pp301-302). USA: Whitening treatment shares 2007 Crest Whitestrips 55% Procter & Gamble Aquafresh White Trays 12% GSK Rembrandt 12% Personal Products / J&J Listerine Whitening 8% McNeil / J&J Private labels 8% • • • Prospects Niche products, such as those for dry mouth, will continue to drive growth, while innovative positioning will encourage consumers to use mouthwash more often within their daily regime. • • Whitening treatments A ? urry of new products has revived the whitening category, with sales increasing by 10%. In particular, products that make the whitening process quicker and easier have enhanced sales. Whitening treatments have also started to incorporate bene? ts traditionally associated with toothpastes and mouthwashes, such as tartar protection and halitosis prevention. Others 5% Sales of Rembrandt fell by 32% to $34mn, despite an adspend of over $5mn. The range comprises whitening kits, strips and a touch-up pen.

In July 2007, J&J launched Listerine Whitening Quick Dissolving Strips, which have since had sales of $22mn. The strips use multi-layer technology that releases hydrogen peroxide to whiten teeth. It also carries claims to kill bad breath germs. New products from large marketers have hampered sales of smaller brands. White Light (Telebrands) has declined by 77%, while Wellquest Ionic fell by 68%. Plus White (CCA Industries) has managed 15% growth, thanks, in part, to updating. Plus White Kits contain a more comfortable mouthpiece, while the 5-minute Speed Whitening Gel is now available for sensitive teeth.

Church & Dwight is to launch Arm & Hammer Whitening Booster in 2008, a tube-based high peroxide formula intended for daily use in addition to toothpaste. Belgium-based company Remedent has announced plans to bring new technology to the US whitening treatment segment. It will begin shipping iWhite, a light activated teeth-whitening kit, to CVS stores in April 2008. The competitive environment Crest Whitestrips continue to lead, taking over half of category dollars. However, the brand has declined by 6% to $160mn, partially owing to increased competition.

Crest Whitestrips had an adspend of around $70mn, over half of which went towards the Daily Multicare variant. The company has continued the “Brightest Five Minutes of your Day” campaign, which encourages consumers to incorporate the strips into their daily regimes. P&G is extending its whitening treatments with Crest Whitestrips Daily Whitening Plus Tartar Protection, expected in stores in March 2008. The strips are positioned to protect against the build-up of tartar, as well as whiten and protect against everyday stains. GSK entered the whitening treatments category in Q1 2007 with Aquafresh White Trays, which posted ales of $35mn. The trays are pre-dosed with hydrogen peroxide solution 10% and are ? exible to provide a custom ? t. GSK has spent $23mn promoting the brand, which has already been extended with Aquafresh White Trays Revive, a touch-up whitening product to be used between whitening treatments. Prospects Innovative technology that makes whitening quicker and easier will continue to be the key growth driver. Products with additional bene? ts and the introduction of SKUs that complement whitening treatments, such as Aquafresh White Trays Revive, are also avenues for growth.

Simpli? yle 6 MARCH 2008 67 ORAL CARE Canada The OTC oral care market – toothpastes, mouthwashes and whitening treatments – continued its steady single-digit growth in 2007, advancing by 3%. Hardware such as toothbrushes is not included in our topline ? gures. Marketers have employed education initiatives to attract consumers to the OTC oral care market. P&G promotes Crest and Oral-B as part of its Teeth For Life campaign, which aims to raise awareness of the importance of oral health and raise funds to support Dentistry Canada.

Meanwhile, the fourth Listerine Gingivitis week was hosted in June 2007 in conjunction with the Canadian Dental Hygienists Association. about toothpastes from China containing diethylene glycol and ordered retailers to remove all toothpastes from the country off their shelves. Also, Neem Active Toothpaste With Calcium (Calcutta Chemical Co) – manufactured in India – was recalled in July 2007 as it also contained DEG, along with harmful bacteria. Although the brand was not approved for sale in Canada, it was found in some stores. The competitive environment

Colgate-Palmolive is one of the key players and it launched Colgate Visible White toothpaste – formulated with peroxide – in summer 2007. The company claims that it not only removes surface stains but also deep stains which have penetrated below the surface. Consumers are expected to be able to notice results within two weeks of use. The launch was supported by the “Rede? ne White – Rede? ne You” competition, the grand prize for which is a professional makeover and a female-oriented gift pack, demonstrating that the brand is targeted at women.

TV ads have also been used to promote Colgate Visible White. Colgate Max Fresh is also now marketed in Canada in tubes or squeezable bottles. Both formats include mini breath freshening strips which are embedded in the paste. Advertising is targeted at young people. For example, the purple-coloured Kiss Me Mint variant, in peppermint and berry ? avour, invites consumers to “be tempting” which it says is about “attitude” and “dancing until dawn”. Max Fresh Burst toothpaste, with “50% more breath strips”, is new to the range; advertising highlights the added freshness that the toothpaste creates.

The Colgate toothpaste range also includes Luminous, to reinforce enamel layers, Sparkling White, Tartar Control, Cavity Protection, Sensitive Whitening and children’s toothpastes. P&G markets a selection of toothpastes in the Crest range including Whitening Expressions, Vivid White, Toothpaste Sales of toothpastes grew by 3%, largely thanks to a double-digit advance by presentations for sensitive teeth. Toothpastes for this condition are now the most lucrative type and grew by 16% to reach sales of $42mn. In 2006, whitening toothpastes were the best-sellers but a decline of 14% brought sales down to $36mn in 2007.

Sales of toothpastes for children grew by 1% to close to $11mn. Meanwhile, those speci? ed for tartar control fell by 12% to $3mn. As with the FDA, Health Canada issued warnings Nielsen market facts: Canadian oral care 2007 Category Dentifrice excluding polishes & whiteners Baking soda Kids Sensitive Tartar control Whitening Oral antiseptics Whitening kits Sales C$mn 222. 1 2. 4 13. 1 52. 6 4. 4 44. 7 107. 6 37. 6 % change 07/06 +2 -6 +1 +16 -12 -14 +6 -1 Source: Nielsen MarketTrack, grocery, drug, mass merchandisers, general merchandisers and warehouse clubs, 52 weeks ending 19 January 2008 (RSP) Simpli? yle 6 8 MARCH 2008 MARKET REPORT Complete, MultiCare, Sensitivity Protection, Cavity Protection, Tartar Protection and presentations for children. Crest Pro-Health has recently been extended with a nighttime variant, claimed to improve oral health, even after dark. Crest Extra White With Scope has also been launched. Tom’s of Maine – acquired by Colgate – markets its toothpastes in Canada, too. GSK markets original Sensodyne and Sensodyne-F, which contains sodium ? uoride. ProNamel, for those at risk of acid erosion, has been part of the Sensodyne range since September 2006. GSK also markets Aquafresh White & Shine.

Church & Dwight ? elds several toothpaste brands – Arm & Hammer, Close Up, Aim and Pearl Drops. The competitive environment Crest Whitestrips are marketed by P&G. The latest addition is Daily Multicare which is designed to be used for ? ve minutes each day. The Whitestrips range also includes original presentations and Renewal, which aims to remove 20 years of stains. Rembrandt whitening kits are marketed by J&J’s Personal Products. Meanwhile, Arm & Hammer Dental Care Whitening Gum is marketed by Church & Dwight. It is positioned to be chewed after meals to clean and whiten teeth. Prospects

Unlike many OTC categories, launches in Canada quickly follow those in the US so some recently added products from across the border could soon reach Canadian shelves. Big name launches in the whitening category could be particularly bene? cial to sales. Mouthwash Mouthwashes continued to grow, with sales advancing by 6%. However, there was no change in volume sales, indicating that the dollar growth is a result of higher prices, or a move to premium SKUs. The competitive environment Listerine is a leading player. The range includes various presentations including a whitening pre-brush rinse.

As in the US, the products are now offered with a less potent taste. A+P emphasises that these are the same formulation, but with a milder ? avour. Listerine PocketPak breath strips are also offered in Canada. P&G launched its ? rst Crest mouthwash – Pro-Health Rinse – in late 2007. This follows the launch of Pro-Health toothpaste in 2006. The rinse is alcohol-free which makes it more comfortable for consumers to use twice a day, according to the company. The brand has been successful in the US (see US section of this Market Report) so P&G will be hoping for a repeat performance in Canada.

P&G also markets Scope mouthwash. Scope White – for fresh breath and whitening – was launched in 2007 and, as in the US, was promoted by television star, Ryan Seacrest. Market forecast USA • The number of multi-bene? t presentations is set to grow as key advantages offered by each product type become increasingly blurred • Demographics such as older adults and diabetics will be targeted speci? cally • A+P for whitening treatments is likely to be stepped up following increased competition in the category CANADA • Additions to the Crest Pro-Health range will help to drive growth • In? ences from the US will further penetrate the Canadian market Our thanks to our regular data providers: For information on IRI, contact Ryan Stredney on t: 312-474-3862; f: 312-474-2592 For TNS-Media Intelligence / Competitive Media Reporting, contact John Ciotoli on t: 212-991-6087 For The Nielsen Company, contact Kristen Ridley via t: 905-943-8343 Whitening treatments Following a decline in 2006, sales of OTC teeth whitening presentations were virtually ? at in 2007. Simpli? yle 6 MARCH 2008 69

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