Has Canban become the new king of toothpaste after reaching the top of the domestic online market?

Text｜Ershan

For a long time, the toothpaste market in China has been dominated by traditional domestic brands such as Yunnan Baiyao, Darlie, Colgate, and Crest, as well as foreign giants. Few new entrants have been able to stir up the highly competitive toothpaste market.

However, as the post-90s and post-00s have become the new main force of consumption, and the proportion of online channels in the toothpaste industry has increased, the competitive landscape of the toothpaste market in China is undergoing earth-shaking changes.

According to Nielsen data, the annual sales of the toothpaste market in China through all channels have reached 34.3 billion yuan, and the contribution rate of the online channel is nearly 40%. Among them, in the ranking of the online toothpaste market share in China from Q3 2023 to Q1 2024, Canban Oral Care jumped to the first place with an 8.5% market share.

This new consumer brand, which has been established for more than 6 years, initially entered the oral care track with mouthwash in 2020 and made a name for itself in the industry with probiotic "non-spicy" mouthwash. In 2021, Canban Oral Care successively obtained Series A and Series B financing, and the investors included many well-known institutions such as Chuangxin Gongchang, Qingliu Capital, and Bytedance. During that period, a large number of new and cutting-edge brands that made mouthwash, mouth spray and other sub-categories emerged in the oral care track in China. They used marketing methods that were closer to young people to develop novel products, quickly creating internet-famous bestsellers and attracting a large amount of capital. However, after the great waves washed away the sand, many internet-famous brands have risen rapidly and then fallen silent in recent years, changing wave after wave, and almost no new brand has been able to enter the first echelon of the industry.

In 2022, Canban transformed and focused on the toothpaste category. Its toothpaste products such as probiotics, lysozyme, and zeolite were launched and quickly detonated the market. According to Frost & Sullivan data, Canban's SP-4 toothpaste in the probiotic series has become the best-selling single product with the highest sales of whitening toothpaste in the entire network in China. At present, Canban's product categories cover various sub-fields such as toothpaste, mouthwash, oral spray, and cleaning tools, among which toothpaste contributes the majority of Canban's revenue, and the overall user volume exceeds 100 million.

As a new national trend brand, why can Canban gain a firm foothold and keep pace with the traditional industry giants?

Canban's founder & CEO Yin Kuo reviewed and summarized three major decision-making nodes to 36Kr: The first decision was to win the championship in the small category track of mouthwash and "get on the table"; the second decision was to obtain sufficient funds in the capital market to provide a prerequisite for expanding the large category of toothpaste; the third important decision was that Canban decided to be a national oral care brand that benefits the people's livelihood, forcing Canban to enter the large category of toothpaste. This is also an important inflection point in the company's development, which means that Canban is no longer a brand that focuses on small categories such as mouthwash, but wants to do a larger market.

According to 36Kr, from 2020 to 2023, Canban's revenue basically achieved a compound growth of more than 100% for three years, with a significant growth rate all the way. After firmly ranking first in the online toothpaste track, Canban began to seize the domestic offline market, continuously sinking, and even began to layout the overseas market and enter countries such as Southeast Asia.

As the first new consumer brand to sit on the top of the online toothpaste market, how can Canban surpass the traditional giants in a short period of time? After becoming the online number one, what will Canban do next? Facing the future, how does Canban understand the new market pattern and industry trend?

With these questions, 36Kr had an in-depth conversation with Canban's founder Yin Kuo.

Becoming the King of Online Toothpaste, the Most Correct Thing is Product Innovation

36Kr: For so many years, foreign and old domestic giants have been occupying the domestic toothpaste market. What opportunities do you think Canban has seized to stand out in the fierce competition? What has been done right?

Yin Kuo: First, we timely seized a historical opportunity, that is, this generation of consumers has a very large generational difference in taste and aesthetics from the previous generation in the choice of consumer goods, especially personal care products. However, the toothpaste market we are doing is a relatively traditional industry. There seem to be many products on the market, but if you take out the products of the previous era, you will find that they are basically the same. That is to say, there are very few toothpaste products on the market that can provide consumers with new choices, new experiences, and new feelings.

Second, I think the most correct thing is that we have made differences in product innovation through accurate insights into current consumers. From the perspective of the consumer market environment in China, this generation of young consumers has begun to pursue a more refined life. At the same time, they not only require products to be cost-effective, but also have a good appearance and a good experience. Young people no longer simply regard oral care products as tools as before, but it has begun to have the attribute of pleasing oneself. Therefore, in product research and development, we have done a lot of homework on how to balance these three to meet the new generation of consumer needs.

Third, China's consumer goods channels have undergone tremendous changes, and the entire industry is facing an opportunity for the redistribution of the profit system. The profit distribution system of many traditional enterprises in the past no longer conforms to the channel composition of today. We have adjusted the profit distribution system so that everyone in the entire chain can make money.

36Kr: You just mentioned that in the past, toothpaste products were highly homogeneous. What specific innovations has Canban toothpaste made? Can you elaborate?

Yin Kuo: This is the case. In the past, the entire oral care product, in fact, everyone was emphasizing the realization of a certain effect through a certain technology or formula. Especially in today's mature scientific research system, every family is focusing on the effect. Although the effect is important, it is easy for everyone to ignore a point, that is, toothpaste is actually the only product in daily chemicals that enters the mouth. For the product that enters the mouth, its brushing feeling, taste, and the fragrance and cooling time that remain after brushing, these elements constitute the most intuitive experience of the product for consumers. For consumers, these sensory experiences are also equally important.

Therefore, Canban toothpaste not only pursues the effect, but also pays great attention to the use experience. For example, our toothpaste uses the essence and fragrance of Givaudan, the world's top company, to replace the chemical fragrance, and consumers will have a very intuitive taste and smell experience at the moment. In the massive user reviews, you will find that many people are saying that Canban toothpaste has a good taste, a relatively dense foaming, a relatively long fragrance retention time, and a strong cleaning power.

How to achieve the effect? Taking the whitening toothpaste product as an example, we have done a lot of work on technological iteration. At first, we did polishing whitening, then upgraded to abrasive whitening, and then iterated to lysozyme whitening. This year, we have pioneered the third-generation zeolite abrasive in the industry and innovated the core components of the product. At present, only we are selling toothpaste with zeolite abrasive, and the consumer feedback is very good.

36Kr: If you were to describe the difference between Canban toothpaste and the previous generation of traditional toothpaste in one sentence, how would you describe it?

Yin Kuo: If the previous generation of products has an old-fashioned toothpaste flavor, then Canban has led a new toothpaste flavor. This sentence is more appropriate. I think that the four key words of innovation, fashion, professionalism, and youth are inseparable from our ability to impress the younger generation of consumers. This is not only our corporate culture, but also our products are made around these key words.

36Kr: We have seen that Canban initially entered the track from mouthwash. Why is the focus now on the toothpaste category instead of the sub-directions such as mouthwash and mouth spray?

Yin Kuo: In fact, when we initially occupied the track through the opportunity category of mouthwash, we mistakenly thought that this track would have a high repurchase rate. But in reality, this category is what we imagined, and the user's usage habits have not reached the level of repurchase, and most of them are trying it out. Therefore, the ceiling of the mouthwash category is too low and the plate is too small. Based on this consideration, we made an adjustment in 2022 to focus on expanding the large category of toothpaste.

36Kr: In the past two years when the capital was hot, there were many new consumer players in the oral care track. But this year, we found that many former internet-famous brands have disappeared in the market. At that time, the industry criticized the reliance on the traffic-playing method. What is your view on "traffic"?

Yin Kuo: Traffic itself is not sinful, and the core lies in how to make good use of it. From the perspective of a startup company, we do need to use traffic to increase brand awareness in the initial stage. But before the traffic, we need to ask ourselves two questions. First, does your product provide long-term value to consumers? Second, can this product bring a unique experience to consumers?

In the previous wave of consumer investment, there was a lot of hot money. Many brands' organizational structures were not very complete, and the product power was not pulled to a high level in the market before they started large-scale launches, which would lead to weakness in the later stage.

36Kr: After experiencing this round of industry reshuffle, where do you think the key to Canban's ability to survive the cycle lies?

Yin Kuo: Whether a brand emerges in one or two years or three to five years is related to the team's ability and also depends on some luck in seizing the opportunity. But without the leading product innovation and the leading consumer insight, all of this does not exist.

Today's Consumer Goods Companies Are Too Difficult, Difficult in Viewing User Needs Hierarchically

36Kr: What do you think of the current domestic consumer market?

Yin Kuo: Today's era is an era of information explosion, and today's consumers are also a group of diverse consumers. This "diversity" means that there are many categories in a group of people, and they have their own value propositions.

I take Xiaohongshu as an example. A considerable number of female groups only love European and American niche products because their value proposition is that when this type of product enters my dresser, they will feel that life is of high quality; another group of consumer groups only buys products with high cost performance. They will study the formula and whether there is a cheaper alternative for the same product; then another type, there is not too much so-called value proposition, and they belong to the type of consumers who follow the trend. That is to say, as long as your sales are high, I think it is likely not bad. In fact, this is also a value proposition.

Therefore, in today's consumer market, the era of "one product for all" is over. Today, if you look at the product structure of Canban, you will find that the Canban toothpaste you can buy in the new retail channel represented by KKV is different from the Canban you can buy in the rural township market and the Canban you can buy in the KA supermarket, because this involves different consumers' acceptance of prices, different requirements for aesthetics, and different needs for the taste of toothpaste.

Today's consumer goods companies are particularly difficult, and the difficulty lies in how to view consumer needs hierarchically and provide diverse products to meet them at different stages. This is a very challenging thing for the organization.

36Kr: How to say this organizational challenge?

Yin Kuo: First, whether the product team can be so refined; second, whether the product supply chain system can support it; third, whether your promotion can keep up. Because the promotion types faced by different groups are different; fourth, is your organization cohesive? How to gather such a group of people and align their goals?

Canban has done a lot of thinking and efforts in this regard. If you look at Canban today, you will find that our company has both very trendy young people born in the 1990s and 2000s, and older and more traditional personnel. Different cultural backgrounds are intertwined. In fact, it is a very difficult thing to coalesce such a complex organization.

36Kr: How do you yourself understand the current consumers? Through industry questionnaire surveys?

Yin Kuo: China has a vast consumer market. If you only rely on questionnaire surveys or recruit a few people to obtain information, it is useless. For a simple example, how much do you think a bucket of 5 - 6 liters of laundry detergent is cost-effective? Many people think that it has to be sold for thirty or forty yuan in the Douyin live stream. But in the rural township market, a 5 - 6 liter laundry detergent is only sold for nine yuan and ninety cents. Can you imagine that?

So the answer to how to understand the Chinese market is to keep walking and keep looking. I travel a large circle across the country every year, chatting with salespeople, chatting with people around the supermarket, and looking at many business forms. I must have a first-hand sense, otherwise even if the industry does a questionnaire, you cannot make a decision.

36Kr: To make consumer goods for the people's livelihood, it must be down-to-earth.

Yin Kuo: Yes, consumer goods are essentially a business of "digging for food in the soil", and it is not fashionable. In the high-end industry, because one person pays a sufficient amount, as long as you catch a small number of people, you can do a big business. But for industries with a low unit price of toothpaste, it requires you to serve at least 500 to 600 million people in China to be possible to become a national brand. Essentially, what we are doing is a business that covers the whole country.