Listerine Brand Management in Brazil

UV7205
Rev. Oct. 14, 2016
Choosing the Right Metrics for Listerine Brand Management in Brazil
As of late 2014, the market for oral care in Brazil had reached USD2.3 billion.1 This industry consisted of
four main categories: toothpaste, toothbrushes, mouthwashes, and dental floss. Despite its value, most
people’s oral care routine (including all possible categories in Table 1) was not completely well established.
Toothpaste and toothbrushes accounted for almost 80% of the industry’s value. Antiseptic mouthwash,
which had a CAGR value of 14.1% from 2009 to 2014, was the fastest-growing category, mainly through the
acquisition of new consumers. Table 1 provides the sales of oral care in Brazil from 2009 to 2014 broken
down by category.
Table 1. Oral care sales in Brazil (millions of USD).
Category 2009 2010 2011 2012 2013 2014
Dental floss 91.78 99.53 106.42 103.75 125.42 132.31

Denture care 22.53 24.92 30.14 34.75 39.03 42.14
Mouth fresheners 0.33 0.33 0.36 0.39 0.39 0.42
Mouthwashes/dental
184.17 183.94 206.94 275.11 322.83 357.08
rinses
Tooth whiteners – – – – – –
Toothbrushes 414.36 430.06 463.64 519.56 644.53 698.11
Toothpaste 728.39 663.03 722.69 914.33 1011.89 1076.94
Oral care 1,441.56 1,401.78 1,530.19 1,847.89 2,144.09 2,307.00
Data source: Oral Care in Brazil, Euromonitor, August 2015, http://www.euromonitor.com/oral-care-in-brazil/report (accessed Feb. 29, 2015).
For comparison, in 2014, the U.S. oral care industry reached USD7.8 billion, and antiseptic mouthwash
was a submarket of USD1.5 billion. In Brazil, there were still some opportunities to grow the category as the
market penetration of mouthwash was low for the overall total population. According to Nielsen, in 2009,
market penetration was 36% and reached 40.2% by 2014, which represented an increase of 4.3 million
households (see Exhibit 1). Further, the brand’s recommended usage of mouthwash was 20 mL twice daily,
which implied an annual usage of 14.6 L. Consumers used only 6% of this suggested volume, 876 mL/year.
According to Exhibit 2 and Exhibit 3, there were some differences among consumer segments classified
based on their product use intensity and recency of trial.
1 USD = U.S. dollars; BRL = Brazilian reais. We use a conversion rate of USD 1 = BRL 3.60.
This case was prepared by Leandro A. Guissoni, Professor of Marketing, Fundação Getulio Vargas (FGV-EAESP), Brazil, and Adjunct Faculty,
Darden School of Business; Paul W. Farris, Landmark Communications Professor of Business Administration, Darden School of Business; and
Olegário Araújo, Master of Science candidate, Fundação Getulio Vargas (FGV-EAESP); based on the Nielsen FGV J&J Brand Challenge in Brazil and
reports from other secondary sources. Copyright © 2016 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights
reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a
spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School
Foundation.
This document is authorized for use only in Prof. Elkana Ezekiel; Prof. Jishnu Changkakoti's PG/IMTG/2021-22/114 (3) at Institute of Management Technology - Ghaziabad (IMT) from Jan
2022 to Jul 2022.
Page 2 UV7205
Market penetration of mouthwash had already increased significantly from 2004 to 2009 from 24% to
78% in A and B social classes and from 11% to 58% in social class C—the middle class (see Exhibit 4 for
socioeconomic level (SEL) definition and share of population in Brazil). The consumption of antiseptic
mouthwash was mainly concentrated in A and B social classes (48.2% of the volume), followed by the middle
class, C (45.2%), and D and E social classes (6.7%).
The category of antiseptic mouthwash was available for purchase by consumers through a variety of
channels. Drugstores accounted for 48% of sales, and the numeric distribution is 83% within this channel.
Although mom-and-pop grocery stores were still an important channel format in Brazil, they represented only
2% of the mouthwash category’s sales. Self-service supermarkets made up the rest as shown in Table 2.
Table 2. Distribution of mouthwashes in Brazil.

Numeric
% of Sales % of Sales Number of Distribution
Store Format
(volume) (value) Stores (within
channel)
Self-service: up to 4 checkouts
8.12 9.16 61,277
(neighborhood locations)
Self-service: 5–9 checkouts 10.04 9.88 4,549
70%
Self-service: 10–19 checkouts 14.51 12.87 1,974
Self-service: 20–49 checkouts 18.26 13.86 749
Self-service: 50+ checkouts 6.92 4.69 127
Drugstore 40.44 47.63 74,831 83%
Mom-and-pop stores 1.71 1.91 326,171 13%
Data source: Nielsen reports in Brazil, Tendências 2015, and Estrutura do Varejo Brasileiro 2010.
Listerine and Colgate War
In 2014, Colgate-Palmolive, which had a 48% revenue share, was the oral care market leader in Brazil,
followed by Procter & Gamble (15.3%), Johnson & Johnson (J&J, 11.9%), and Unilever (8%). J&J’s Listerine,
however, was the mouthwash category leader (see Table 3).
Table 3. Revenue brand share of mouthwashes.
Brand 2009 2010 2011 2012 2013 2014
Listerine 33.5 33 32.4 32.3 32.4 33.4

Colgate 20.1 26.9 29.6 31 30.3 29.7
Oral-B 12.8 14.2 16.1 15.8 15.8 16.1
Cepacol-Sanofi 16.8 13.6 11.1 9.7 9.7 9.4
Others 16.8 12.3 10.8 11.2 11.8 11.4
Data source: Euromonitor, 2015.
2022 to Jul 2022.
Page 3 UV7205
Datafolha Institute conducted the most popular top of mind survey in Brazil, surveying more than 8,000
people in 244 different cities. According to one top of mind survey,2 in 2015 Colgate was the top of mind
brand in overall personal care products. Colgate also had the highest top of mind recognition in toothpaste,
rising from 24% in 2001 to 59% in 2015. Specifically in mouthwash, in 2012 Listerine was ahead of Colgate
(see Table 4). But after 2013, when consumers were asked, “What brand comes to mind when you think of
mouthwash?” Colgate took the lead over Listerine, especially in the poorest regions such as in the north
(32%) and northeast (33%), and also among young consumers (35%). In the more developed regions,
Listerine and Colgate were both at 24%.
Table 4. Top of mind survey in mouthwash (all of Brazil).
Brand 2012 2013 2014 2015
Listerine 20 19 21 19
Colgate 17 22 27 28
Oral-B 5 5 5 6
Cepacol-Sanofi 6 5 5 4
Others 9 7 8 8
Doesn’t know / none 43 42 34 35
Data source: Datafolha Institute, http://www1.folha.uol.com.br/especial/2015/top-of-mind/
(accessed Feb. 29, 2016).
Listerine Brand Management
I do not want the Listerine brand to attract those triers less likely to repurchase the category. I want the
brand to attract the category lovers.
—Ronaldo Art, J&J marketing manager in Brazil3
Listerine first became available to consumers in Brazil in 1987. J&J added this brand to its product
portfolio worldwide after acquiring Pfizer’s Consumer Healthcare division in 2006. In Brazil, Listerine offered
only mouthwash, whereas in the United States, the Listerine brand also offered toothpaste and other types of
products.
In 2010, Ronaldo Art, marketing manager at J&J, was hired to become the product manager for the
Listerine brand in Brazil. After spending two years working for Cadbury in Brazil (which was further acquired
by Kraft Foods Group, Inc.) and seven years at Unilever, Art was faced with a difficult, competitive
landscape when he began working for J&J: unexpected growth of Colgate’s market share from 20.1% in 2009
to 26.9% in 2010 (see Table 3). Art’s job was to lead Listerine’s efforts to achieve overall category growth in
Brazil, while maintaining its first position in mouthwashes and the brand’s profitability. As Art explained,
“product innovation, consumer awareness of the category, and visibility of the brand at the point of sale were
the foundation to do so.” He also wanted to develop a long-term strategy for the brand rather than
2 Datafolha Survey, 2015, http://www1.folha.uol.com.br/topofmind/2015/10/1696706-destaque-do-top-higiene-colgate-esta-em-mais-de-50-dos-
lares-do-mundo.shtml (accessed Mar. 2, 2016).

3 Author interview with Ronaldo Art, February 15, 2016; unless otherwise noted, all subsequent quotations derive from this interview.
2022 to Jul 2022.
Page 4 UV7205
stimulating short-term increases in market share that could compromise the equity of the brand, its
profitability, and its long-term competitive advantage.
In Brazil, historically, the brand’s primary consumers were from the A and B social classes. In 2010,
however, in order to reach the potential middle class in Brazil, Listerine introduced a new product, Essencial,
which was roughly 15% cheaper than the average brand price (in terms of price per ounce) and was
distributed through the poorest regions and neighborhoods in the country. The objective of Essencial’s
pricing strategy was to match Colgate’s lower average price in this category at that time. One year after the
launch, the new product had already reached 2% volume market share. Art said that J&J had introduced
Essencial to increase market penetration and grow the category. Even though the plan for Essencial had been
designed before he joined the company, Art was in charge of its execution. Thus introducing this more
affordable product called Essencial was one of his first steps.
As it turned out, J&J realized that not only middle-class consumers were buying this new product—so
were wealthier Brazilians.4 J&J did some research to understand the reason why this was happening.
Although the Essencial formula contained alcohol (as did the traditional Listerine Cool Mint), further
investigation based on some market research led to the discovery that the perceived strong flavor of Listerine
had been putting off new consumers, not the price. Also, some dentists had not been recommending the
product to their patients because of the product’s alcohol-based formula.
In 2012, as the brand had gotten closer to middle-class consumers with Essencial as well as in response
to the new flavor opportunities, the company launched Listerine Zero, which was a less intense mouthwash.
This was one of Art’s next steps for four reasons. First, Listerine Zero created a point of parity with Colgate’s
less intense antiseptic mouthwashes. Second, this allowed J&J to bring new consumers to the category
regardless of their SEL, and this product would actually become popular among consumers from every social
class. Third, it helped the company gain more visibility at the point of sale through higher product variety and
gains in share of shelf. Finally, the brand could intensify its approach toward dentists. Because Listerine Zero
was not an alcohol-based product, some of the dentists who were concerned about Listerine’s alcohol-based
formula started to recommend Listerine Zero to their patients. As a matter of fact, Brazil had the highest
number of dentists in the world—more than 240,000.5 Art commented that the “dentist is one of the most
important influencers of the category’s overall use by consumers. We had focused on providing the dentists
with some consistent research that had shown the importance of the use of antiseptic mouthwashes.”
Despite these successes, in 2012, the company’s executives reported that, “We need to increase the
visibility of the category to consumers.”6 So far, Art’s steps had been made mostly toward product
innovation—Essencial and Listerine Zero— and increasing consumer awareness and product visibility at the
point of sale.
In 2013, to increase consumer awareness and trial rates in the mouthwash category overall that could
benefit Listerine specifically, the brand rolled out the “21-day challenge” campaign,7 which promised
consumers a refund if they were not satisfied with their purchase after 21 days. Listerine increased its TV
spending, which resulted in higher gross rating points than any other brand in the mouthwash category had
4 Katy Watson, “Brazil’s Battle for the Nation’s Billion Dollar Smile,” BBC News, December 11, 2014, http://www.bbc.com/news/business-
30416226 (accessed Feb. 29, 2015).

5 http://www.bbc.com/news/business-30416226.
6 Datafolha Survey, 2012, http://www1.folha.uol.com.br/topofmind/2012/10/1173259-conheca-as-10-mais-lembradas-do-necessaire-
brasileiro.shtml (accessed Mar. 2, 2016).
7 The campaign was inspired by the idea presented in the book The Power of Habit that it takes 21 days for someone to form a habit.
2022 to Jul 2022.
Page 5 UV7205
ever earned. The ability to reach such a large audience allowed them to successfully promote this campaign.
According to Art:
The campaign aimed at improving the oral care routine of Brazilians. This was our way to increase
consumer’s confidence in the category by lowering some perceived financial risks if someone had not
found the product beneficial. It was a promotion without having to distribute free samples of the
product that could have had higher costs and less effectiveness. The 21-day challenge was very
successful to the brand.
In the same year, Listerine launched a TV commercial called “Boca” (Portuguese for “mouth”).
According to Art, he had to face major internal challenges in order to get the content of this TV ad approved
by J&J for further distribution. At that particular moment, Art believed that Listerine had to better balance
the brand’s traditional rational copy messages with an emotional one. He explained, “Instead of
communicating the use of Listerine by showing the bathroom environment only, we (Listerine) need to be
more connected with the day-to-day life.” In this TV ad, Art explained:
We had shown what someone’s mouth goes through in a day with the support of different scenes to
illustrate a variety of activities performed by people since they woke up in the morning until late in
the night. We also wanted to encourage the market to use mouthwash with a certain frequency. This
was a breakthrough to the company because the ad’s content had been more rational-oriented since
2007, whereas this one offered a good balance between rational and emotional messages.
To influence the trial rate, the company had intensified its efforts to put Listerine mouthwash in public
bathrooms for free so consumers could try the product.8 In the meantime, Colgate had been using its
complete oral care portfolio in Brazil (toothpaste, toothbrush, dental floss, and mouthwash) to strengthen its
mouthwash product line by offering more promotion at retail stores than the competition. They started to
offer free mouthwash when consumers had purchased other Colgate products. Exhibit 5 and Exhibit 6
show some examples of shelf position and marketing campaigns from these two brands.
In response, Art’s next step was to encourage the brand to increase the visibility at the point of sale. In
2014, the brand introduced a new, larger-size stock keeping unit (SKU). The new package sizes helped to
increase the brand’s in-store visibility and were used as a trigger to offer promotions that would not
compromise the profitability of the brand, such as “purchase 750 mL, get 1.5 L.” That is, rather than giving
free samples of the product, Listerine’s promotion had stimulated the usage index and supported increase in
the frequency of use of the product. In fact, recency (i.e., the length of time since a customer’s last purchase)
was a concern to market this category. The brand management realized that consumers of antiseptic
mouthwashes were not going to retail stores to purchase this category frequently. Larger package sizes and
this type of sales promotion had allowed Listerine to increase the brand’s usage index. As a result, based on a
survey purchased by J&J, Art mentioned that around 2014, Listerine had the highest penetration among
category lovers—73%. This was approximately 10 percentage points greater than the second brand. Further,
Listerine category lovers had spent 10% more than the competitor’s category lovers and had purchased, on
average, 200 mL per year more.
Traditionally, J&J as a company had a strong presence in the drugstore channel. This was supported by
the company’s portfolio of nonprescription drugs (e.g., Tylenol), and through its different business units,
such as Janssen Pharmaceutica, which carried a large portfolio of prescription drugs. Therefore, Listerine as a
J&J product had power and a strong presence in the drugstore channel in Brazil. But Colgate had a more
8 http://www.bbc.com/news/business-30416226.
2022 to Jul 2022.
Page 6 UV7205
representative presence than Listerine in the grocery store channel (e.g., supermarkets). As Art described,
“After 2014, we decided to also prioritize the grocery store channel besides the drugstore format.” Larger
SKUs had been especially important for manufacturers to sell to consumers through supermarkets. As
Listerine had innovated in its portfolio with larger SKUs, new flavors, and massive communication
campaigns, the brand management took this opportunity to target distribution efforts toward the grocery
channel too, and it gained visibility at different types of retail stores.
At the end of 2013, Listerine had 12% of numeric distribution in the grocery channel and the relevant
competing brand had 14%. By the end of 2014, Listerine had reached 13% of numeric distribution and the
competing brand had 11%. In the same period, Listerine had 96% of product category volume (i.e., numeric
distribution, weighted by penetrated outlets’ share of sales of all product categories), and the main competing
brand had 94%. As a result of the marketing initiatives, Listerine was able to increase volume market share in
the category from 37.7% (2013), to 38.4% (2014), and to 41.7% (2015). The main competitor’s volume share
went down from 31.4% (2013) to 26.9% (2015).
Art was confident that he was making the right decisions for the brand and taking the necessary risks to
avoid some initiatives that would have resulted in short-term results rather than a more sustainable advantage
in the mouthwash market in Brazil. In addition to the positive market share and brand profitability results for
Listerine, he admitted, “The success of Listerine is the foundation of my career at J&J.”
2022 to Jul 2022.
Page 7 UV7205
Exhibit 1
Population Statistics in Brazil
Brand 2009 2010 2011 2012 2013 2014
Households (in
56,119.90 57,324.20 58,369.10 59,343.90 60,251.50 61,092.70
millions)
Occupants per
3.4 3.4 3.4 3.3 3.3 3.3
household
Middle-class
households (in 12,628.20 13,010.10 13,339.30 13,589.10 13,868.40 14,121.60
millions)
Data source: Euromonitor International.
2022 to Jul 2022.
Page 8 UV7205
Exhibit 2
Classification of Households in the Mouthwash Category
% Market Penetration
(Category Lovers, Occasionals,
% Households (Brazil, Mouthwashes) and Triers)
4.6%
13.1% 11.5%
16.2%
48.4%
Category Lovers
Occasionals
Triers
Leavers‐1
19.5% 40.2%
Leavers‐2
35.6% Category Rejecters
11.0% % Spending (Category Lovers,

Occasionals, and Triers)
 Category Lovers: % households that purchased the category in the last two years. The average purchase in
this category by all households is more than 2.6 L/year. 33.3%
 Occasionals: % households that purchased the category in the last two years. The average purchase in this
category by all households is less than 2.6 L/year 34.3%
 Triers: % new households that purchased the category in the last year.
 Leavers-1: % households that use mouthwashes but have not purchased the category in the last year.
 Leavers-2: % households that have not purchased the category in the last two years.
 Category Rejecters: % households that are not likely to use the category. 32.3%
Source: Analysis presented during FGV-EAESP J&J Brand Challenge (2014) based on category market research.
2022 to Jul 2022.
Page 9 UV7205
Exhibit 3
Shopping Characteristics of Households in the Mouthwash Category
Average (Total Category

Purchasing Habits Occasionals Triers
Category) Lovers
Market penetration 40.30 4.60 16.20 19.50
Average purchase by household / 0.888 2.660 0.668 0.651
year (L)
2.30 5.90 1.90 1.70

Purchases per year
Amount purchased per shopping 0.387 0.453 0.346 0.373
trip (L)
Average spending by household 2.63 2.99 2.52 2.46
(USD)
Share of products (in volume) 31.00% 34.00% 28.00% 32.00%
bought on promotion
Source: Analysis presented during FGV-EAESP J&J Brand Challenge (2014) based on category market research.
Exhibit 4
SEL in Brazil
Average Annual Household Income % of Population (Total

SEL
(USD) Brazil)
A 67,575.20 2.7
High B1 28,986.27 5.0
B2 14,757.87 18.1
C1 8,030.03 22.9
Middle
C2 4,820.80 24.6
Low D–E 2,132.60 26.6
Data source: Brazilian Market Research Association (ABEP, 2014), based on Brazilian Institute of Geography and Statistics (IBOPE).
2022 to Jul 2022.
Page 10 UV7205
Exhibit 5
Colgate Promotional Campaign and Example of Category Visibility at Retail Stores
Source: Presented during FGV-EAESP J&J Brand Challenge (2014).
2022 to Jul 2022.
Page 11 UV7205
Exhibit 6
Listerine 21-Day Challenge (Brazil)
Source: Presented during FGV-EAESP J&J Brand Challenge (2014).
2022 to Jul 2022.

Listerine Brand Management in Brazil

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UV7205

Rev. Oct. 14, 2016

Choosing the Right Metrics for Listerine Brand Management in Brazil

Table 1. Oral care sales in Brazil (millions of USD).

Category 2009 2010 2011 2012 2013 2014

Dental floss 91.78 99.53 106.42 103.75 125.42 132.31

Table 2. Distribution of mouthwashes in Brazil.

Listerine and Colgate War

Table 3. Revenue brand share of mouthwashes.

Brand 2009 2010 2011 2012 2013 2014

Listerine 33.5 33 32.4 32.3 32.4 33.4

Table 4. Top of mind survey in mouthwash (all of Brazil).

Brand 2012 2013 2014 2015

Listerine Brand Management

2 Datafolha Survey, 2015, http://www1.folha.uol.com.br/topofmind/2015/10/1696706-destaque-do-top-higiene-colgate-esta-em-mais-de-50-dos-

lares-do-mundo.shtml (accessed Mar. 2, 2016).

30416226 (accessed Feb. 29, 2015).

Brand 2009 2010 2011 2012 2013 2014

11.0% % Spending (Category Lovers,

Average (Total Category

2.30 5.90 1.90 1.70

Average Annual Household Income % of Population (Total

Source: Presented during FGV-EAESP J&J Brand Challenge (2014).

Source: Presented during FGV-EAESP J&J Brand Challenge (2014).

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