Despite being used by almost every individual on a daily basis, nobody really gives much thought to toothbrushes. Most of us just pick them off the shelf, some on the basis of their colour, most on the basis of their brands. But did you know India is, actually, a major toothbrush manufacturing hub and a favourite contract manufacturing destination for even some of the top MNCs? Here’s a detailed analysis by The Dollar Business.

Aadhira Anandh M | September 2015 Issue | The Dollar Business

Today, stories of our grandparents using twigs to brush their teeth appear to be nothing more than myths, isn’t it? But the fact is that not too many decades back, twigs were the preferred instrument in India to keep one’s teeth and gum healthy. While toothbrush had been in use in China since the 15th century and mass-produced in Europe in the 18th century, they had failed to reach India, despite the country being one of the first users of toothpaste. At the same time, although mass-produced even during the 18th and 19th centuries, until the mid-20th century toothbrushes used to be made up of only natural bristles and hence, had several limitations. But with Wallace Carothers inventing nylon for DuPont in 1935, toothbrush manufacturing got a massive boost and by the 1950s, industrial scale manufacturing of toothbrushes, with several varieties of nylon bristles, was on in full swing.

Trusted by the best

For the last several decades, India’s toothbrush market has been dominated by large MNCs like Colgate Palmolive, Unilever and Procter & Gamble. In fact, Colgate Palmolive, which, earlier this year, commissioned a new toothbrush manufacturing facility, with a capacity to produce 220 million units/annum, at Sricity in Chittoor district of Andhra Pradesh, in its FY2015 Annual Report, claims to have a 42.1% share in the Indian toothbrush market. Giving a little bit of competition to these MNCs are a host of home-grown brands like Ajanta and several other manufacturers, which don’t have their own brands and sell either unbranded toothbrushes or are just contract manufacturers. In fact, many of these contract manufacturers have attained such great expertise that even large MNCs – both in India and abroad – outsource their production to them. And the result of such outsourced contract manufacturing is millions of dollars worth of exports every year. “The Indian toothbrush manufacturing industry is completely into contract manufacturing,” Nimith Mehta, Manager, N. N. Impex, a Mumbai-based exporter of toothbrushes to MNCs like Procter & Gamble, tells The Dollar Business.

Most large Indian toothbrush manufacturers operate as contract manufacturers for multinational giants like Colgate Palmolive and Procter & Gamble.

World class

An interesting aspect of India’s toothbrush exports is the fact that their per unit price is comparable with that of a country known for high-quality manufactured products – Switzerland – and higher than that of countries like UK and Italy! Yes, the quality of the toothbrushes exported by India is at par, if not better than those manufactured even in the developed world. “When it comes to quality, Indian toothbrushes have always been at the top. We have always provided the world with best quality toothbrushes. In fact, it will not be an exaggeration if I say that India is still exporting toothbrushes only because there are a few MNCs that prefer Indian quality over everything else,” Mohan Nair, CEO, Logic Plastics Pvt. Ltd., one of India’s top toothbrush manufacturers, tells The Dollar Business.

Toothless

Despite even top MNCs vouching for the quality of India’s toothbrushes, their exports from the country have grown at an anaemic CAGR of just 8.8% in the last 10 years. And as is the case with most manufactured items, the problem is cheap products from China. “The toothbrush exporting industry was doing great till 2003. We had good products and exports were surging. But that’s when the Chinese came in. They started exporting toothbrushes all over the world at much lower prices, which was a big blow to us. In fact, several Indian companies have gone bankrupt ever since the Chinese came into the market,” Nair adds. The troubles of India’s toothbrush exporting industry doesn’t just end with China. Vietnam too has eaten into India’s toothbrush market in a big way. For, while a decade back, in CY2005, the total value of Vietnam’s toothbrush exports, at $3.3 million, was just a fraction of that of India’s $13 million, in CY2014, the former’s exports, at $101 million, were more than twice of India’s $50.2 million. Why? The answer to this question is simple. Thanks to China and Vietnam emerging as sources of cheap toothbrushes, large MNCs, who used to traditionally procure from India, today, come to our doorsteps only when they require high quality products. This has led to extreme capacity underutilisation among Indian manufacturers, which has further led to mounting overheads and dependence on temporary labourers. “This business is full of risks. One needs deep pockets and should be open to risks to survive. Hence, not many new players are entering this segment,” Nair rues.  

Elaborating his point further, Nair says, “The primary machine used for toothbrush production costs about a crore of rupees. To start a manufacturing unit, one needs at least three such machines. One then needs to spend Rs.20 lakh more to develop a new design. Finding and retaining efficient labourers is also an issue. Another aspect of this business that one needs to keep in mind is that toothbrush manufacturing machines are not versatile. They can be used to manufacture only toothbrushes, nothing else.” On the other hand, Mehta has a slightly different take on the reason for India’s toothbrush exports remaining stagnant. “When it comes to toothbrushes, their quality, actually, doesn’t make a big difference. It’s all about the cost of production. If we are competitive, we get orders. Else, buyers go for other sources. This, because the quality of toothbrushes, generally, is pretty good since most manufacturers use similar machines and the same raw material. More than quality, it’s cost that is the driving force in this business,” says Mehta.

Silver linings

Though mired in several problems, the Indian toothbrush export story is not all about gloom and doom. Firstly, even though exports are not growing at the rate one would have wanted, they offer great margins. “Export margins are pretty good. We are still in the export business only because margins are high. On an average, an Indian toothbrush manufacturer operates at about 15-20% margin and exports offer a bit on top of that,” Mehta confirms. Secondly, even though China and Vietnam seem to be running away with the global toothbrush market, they might soon be hitting a major speed bump. Why? “China’s cost of production is rising and is now, almost at par with that of India. This should lead to more exports from India in the near future,” answers Nair. He also believes that India is likely to have its own design bank very soon and that should be of great help.  

 For wider smiles

That India’s toothbrush exports never really collapsed even when the Chinese juggernaut was on top gear reinforce the point that the fans of Indian toothbrushes are many. The anaemic growth in their exports have only been because of cost differential. But given that cost of production is rising in China and interest rates in India can only head lower from hereon, one can only infer that the future of India’s toothbrush exporting industry is bright, if not as sparkling as they make our teeth.  

“Quality-wise, Indian toothbrushes have always been considered amongst the best” - Mohan Nair, CEO, Logic Plastics Pvt. Ltd.

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Mohan Nair, CEO, Logic Plastics Pvt. Ltd.