Rivals Brush Crest Aside As Toothpaste War Heats Up

Toothpastes have been promising consumers everything but a visit from the tooth fairy lately, with an onslaught of ads for products that whiten teeth, reduce sensitivity, control tartar, eliminate plaque and generally produce a more kissable mouth. So how is it that Crest, for nearly 40 years the market leader, was so slow to respond?

Surely Procter & Gamble realized that Crest, one of its highly prized brands, was being chased by versions of Colgate, Mentadent and Aquafresh. Yet P&G has been so late to the game that even though demand for pastes with peroxide and baking soda has more than tripled in three years, the company is only now introducing a formula that includes baking soda.

Crest is still the United States’ best-selling toothpaste, but it is suddenly struggling to hold that lead. Just five years ago, in dollar terms, Crest had 35 percent of the nation’s $1.5 billion toothpaste market, but that has dropped to 27.2 percent, according to Information Resources Inc., a Chicago market-research firm.

This is, to be sure, a minor financial irritant for a giant like P&G. With top sellers like Pampers, Tide and Pantene shampoo, the $35 billion company still dominates the consumer-products world. Yet the company does not take kindly to losing any marketing battle. And Crest’s stumble is one of P&G’s biggest missteps in recent years.

For the seemingly omnipotent P&G, the lesson is clear: In today’s increasingly competitive marketplace, even powerhouse brands cannot be ignored.

The company is struggling to catch up, preparing new twists on the toothpaste formula. Even as it does, though, some competitors and marketing experts contend that in toothpaste at least, P&G has lost its edge, falling behind the latest technology and consumer preferences.

It put its money on a Crest gum-care formula, for instance, while its rivals bet on the brightening power of peroxide and baking soda.

It is debatable, of course, whether consumers need all the new toothpaste flavors, colors and formulas. The American Dental Association warns that although peroxide does whiten teeth, some people have adverse reactions to it, and that desensitizing formulas can take up to six weeks to produce results.

What is more, the association said, baking soda “hasn’t been shown to have any effect on gum disease, and as a mild abrasive, it doesn’t really contribute to clean teeth.”

What is clear, though, is that consumers love these bells and whistles. And Procter & Gamble was “slow to follow trends generated by its rivals,” said Michael Grant, an analyst at J.P. Morgan. “They have such a huge portfolio of brands that I guess you could say their attention was on other areas of the business.”

P&G acknowledges that Crest, even though it did introduce gum-care and tartar-control formulas over the years, has lost some of its edge. The company’s chairman, John Pepper, told analysts and investors last month that “during the past couple of years we have not done a very good job in that category.”

It clearly did well a generation ago. P&G introduced Crest in 1955 as the first fluoride toothpaste. In 1960 the American Dental Association recognized Crest as effective in preventing tooth decay. With that lift, Crest quickly became the nation’s best-selling toothpaste.

More recently, Crest Tartar Control was the first brand the association recognized as effective in reducing both tooth decay and tartar, but its success has not kept Crest from losing ground over all.

Colgate, made by Colgate-Palmolive Co., is steadily picking up steam and now has 19 percent of the market, up slightly from last year, according to Information Resources. And Mentadent, made by the Chesebrough-Pond’s unit of Unilever NV, has in just four years become the No. 3 brand, with 12 percent, followed by Aquafresh, made by SmithKline Beecham PLC, with 10.8 percent.

A broader question is whether Crest’s tumble is a symptom of pervasive ills at P&G, particularly in its old-line brands. A recent Prudential Securities study showed that P&G had lost market share in the last three years in about half of the 41 categories surveyed. The company’s sales have also been sluggish for four quarters, increasing just 2 percent in the latest period.

Still, some analysts see many of the problems as short-term kinks and note that even though sales were sluggish, the company exceeded earnings expectations in the most recent quarter.

“The slow sales growth we’ve seen in the last few quarters are for a variety of different reasons, most of which are fleeting going forward,” said Heather Hay, an analyst at Prudential Securities. “The problems related to Crest are just that - Crest problems. On a global basis the oralcare business has not been on top on the list of priorities.”