Colgate-Palmolive eyes H2 rebound amid urban stress, rural growth
Colgate-Palmolive (India) CEO Prabha Narasimhan anticipates a rebound in consumer sentiment later this year, driven by government interventions and good monsoon forecasts.
New Delhi: Despite a “tough" March quarter and lingering pressure on many urban consumers, Prabha Narasimhan, managing director and chief executive officer (CEO) of Colgate-Palmolive (India) Ltd, expects a rebound in consumer sentiment and spending in the latter half of the year.
She cited government interventions, improved liquidity and a good start to the monsoons as key drivers for this change.
“We're hoping the uptick in consumer sentiment happens towards the back end of the year. The government has intervened, there's been a tax cut, liquidity has improved, monsoons are meant to be quite good this year—all of those should certainly help. We see two pockets of opportunity—the top 30% of urban India has no shortage of money for FMCG products; they continue to want to premiumize. Meanwhile, rural India continues to be buoyant—crops have been good and the sentiment is also positive. However, there is stress in 70% of urban India that has been slightly under pressure," Narasimhan said in an interview with Mint on Monday.
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In fiscal 2025, the maker of toothbrushes and body wash reported a 6.3% increase in sales, reaching ₹5,999 crore, compared to ₹5,644 crore in the previous year. The company's profit after tax in FY25 grew by 8.5% to ₹1,437 crore, up from ₹1,324 crore in the previous year.
However, the fourth quarter saw a dip in both profit and sales, with net profit down 6.5% to ₹355 crore and revenue declining 2% to ₹1,452 crore.
Rural volumes grew ahead of urban for the Mumbai-headquartered company during the fiscal year.
The March quarter was “tough", she said. Analysts attributed this to greater competition and weak urban demand.
Managing consumption
“Consumers respond to a feeling of confidence. If they feel a little bit of pressure, then they tend to optimize across all parts of their budget. There are some things that are sacrosanct such as medical and education [expenses]. In the case of oral care, it is management of consumption; it's not through smaller pack sizes or cheaper packs," she told Mint in an interview in the capital.
The Indian fast-moving consumer goods (FMCG) industry reported 11% year-on-year value growth in the March quarter, driven by a 5.1% volume increase and a 5.6% price hike, according to data released by NielsenIQ.
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Urban market growth decelerated in the March quarter, while rural markets saw an 8.4% volume increase, a slight dip from the December quarter.
Other large packaged goods companies such as Procter & Gamble Hygiene and Health Care Ltd, the maker of Whisper, Vicks and Old Spice, gave similar commentary earlier this month.
The company reported a steady revival in rural consumption, even as urban demand remains under pressure.
The home and personal care category, where Colgate Palmolive operates, saw consumption growth of 5.7% in the March quarter, with higher demand in rural areas, NielsenIQ noted.
The company competes with Dabur India and Hindustan Unilever Ltd.
Oral care penetration
Meanwhile, the maker of Colgate toothpaste and Palmolive body wash continues to increase the usage of oral care products in India.
“We would like to move the needle as far as urban India is concerned—to get the 80% of consumers who don't brush twice a day to brush twice a day. As far as rural India is concerned, the aim is to get the one in two consumers who don't brush daily to brush daily," she said.
A decade ago, oral care penetration in India was around 85%. Today, it’s close to universal.
The company has also been pushing its flagship Oral Health Movement.
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As part of the same, over 4.5 million Indians screened their oral health in 700 districts.
The company spent 14% of its FY25 annual sales on advertising. Narasimhan said the number will remain in the ballpark and within that range in the current fiscal, too.
Meanwhile, commenting on global geopolitical volatility, Narasimhan said the company is largely insulated from supply chain disruptions.
“We are a largely ‘make in India’ for India company, so almost our entire production of both toothpaste and toothbrush is in India across our four plants. We are reasonably self-sufficient in that sense. We've tried very hard to localize, even to source raw materials; to that extent, one is a little bit insulated from all of this. The macro environment has become so volatile that it's just impossible to comment on and it's impossible for us to do anything other than to insulate on a more structural basis as we have done and continue to do," she added.
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