China Consumer

Toothpaste war

Two dental rivals launch IPOs


Lengsuanling: sold 6 billion tubes

For older generations of Chinese that adhere to more traditional beliefs about health, a ‘must’ is the avoidance of cold foods and drinks. That outlook was prevalent in 1996 when one of China’s most popular toothpaste brands Lengsuanling made a TV advertisement featuring an icy drink, complete with sound effects of slurping and ice-crunching. Older folk were shocked at the commercial, which claimed that the toothpaste would protect sensitive teeth from pain. “Cold or hot, sweet or sour, eat as much as you want,” the advertisement promised.

Since its launch, Lengsuanling has accumulated sales of over six billion tubes of toothpaste and peaked at 80% market share in the ‘sensitive teeth’ category. Its parent company traces its own origins back three decades before that sensational ad aired, starting out as the Chongqing Toothpaste Factory in 1966.

“At that time, toothpaste factories were blooming everywhere, and almost every province had one,” company chairman Deng Rong explained to Chongqing Daily.

The firm went through a round of shareholder restructuring in 2001 and saw its name switched from the Chongqing Toothpaste Factory to Dencare Oral Care Products. Last month it applied to list on the Shenzhen Stock Exchange’s main board. According to the prospectus, its major shareholder is a state-owned enterprise: Chongqing Sasac’s China Textile Group, which owns 60% of Dencare’s shares. A smaller chunk of the firm – around 8% – is owned by Wen’s Foodstuff, a Guangdong-based chicken and pork producer founded in 1983 by Wen Beiying. It initially invested Rmb55 million in Dencare in mid-2018, when the company went through ‘mixed ownership’ reforms to bring in private sector investors.

Dencare’s sales saw a 21% increase between 2019 and 2021, rising to Rmb1.1 billion ($164 million). Net profit almost doubled in the same period to Rmb119 million.

The company wants to raise Rmb660 million through the forthcoming IPO and lists the use of proceeds as including an oral health research centre and upgrades for its factories (at a cost of around Rmb250 million). The remainder will be used for promotional and marketing activities.

Rival companies such as Crest, Darlie and Colgate pose tough competition. Annual output from toothpaste manufacturers in China surpassed 671,700 tonnes in 2021, of which nearly three-quarters came from the top 10 players. Dencare’s toothpaste ranked fourth in retail sales last year, according to research data from Nielsen. Yunnan Baiyao and Darlie enjoyed dominant positions with 24% and 20% market shares respectively, followed by P&G in third. Dencare was marginally ahead of Saky in unit sales, although it trails its Guangdong-based rival in terms of revenues.

Saky’s toothpaste is made from plant essence and its parent Weimeizi also plans a debut in the stock market, in its case in Hong Kong.

Weimeizi’s revenues are also boosted by sales of electric and conventional toothbrushes, as well as mouthwash.

The Standard, a Hong Kong-based newspaper, first reported on Weimeizi’s listing intentions in March, noting that it had filed its listing application in the city the prior month and that its revenues had been relatively stable at Rmb1.6 billion over the prior three years. Its average toothpaste tube sells for a relatively high price of Rmb20 (double the national average) and the company has grabbed a 20% share of the market for children’s toothpaste.

Frost & Sullivan, another research house, estimates that China’s oral care market will nearly double to Rmb152 billion by 2025, with electric toothbrush sales being a strong driver of revenues at Rmb52 billion in sales that year. Like Dencare, Weimeizi’s Saky has paid for endorsers and ambassadors for brand-building, including contracts for former footballer David Beckham and leading Chinese actress Li Bingbing. Investors will soon have the choice of which of the two toothpaste brands they want to buy at IPO…

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