Colgate-Palmolive (NYSE:CL) had publicly announced a patent filing earlier this year for a new toothbrush that releases chemicals straight into your mouth as you brush. This innovative idea, if successful, may work wonders for the company and help it to further strengthen its dominance in the oral care market worldwide. As of December 2012, Colgate Palmolive owned 33% of the global market for toothbrushes.
The patent, filed in October 2012, is for a toothbrush capable of releasing small doses of chemicals in the user’s mouth for as long as three months of continued usage. This is made possible by adding a specialty-shaped patch on the back of the brush’s head. The patch releases the chemical in a controlled manner to provide users with an enhanced brushing experience. The oral care division contributes more than 44% to Colgate Palmolive’s intrinsic value.
We estimate this proportion to increase if the patent gets approved and the company is successfully able to capture the enhanced market size developed by this new genre of toothbrush. 
The new patch is designed in a way that it can release any chemical into the user’s mouth. Colgate Palmolive is a considering a list of chemicals and flavors such as:
- Flavors including apple, mint, lemon and other fruits
- Topical pain relief chemical such as capsaicin and benzocaine
- Appetite suppressants
This innovation would help the company expand its market share as certain consumers may switch to the new toothbrush. We also expect the new product to have a cannibalizing effect on Colgate’s existing toothbrush sales, but the additional revenues from greater market share and premium pricing should more than offset the effects of cannibalization. This innovation may also give birth to a whole new genre of medicinal toothbrush just like it happened with the introduction of pain relieving, whitening and sensitive teeth toothpastes.
Sizing The Potential Impact On Top Line And Market Share
To gain a sense of the potential market opportunity and impact we look specifically at the caffeine variant of the toothbrush. We assume that primarily coffee drinks would be interesting or willing to use this product. It is estimated that about 400 billion cups of coffee are consumed every year worldwide. Within the United States, about 100 million people consume on average 350 million cups of coffee daily. Assuming the daily coffee consumption to be slightly lower globally at 2 cups a day, we estimate that about 548 million people drink coffee daily worldwide. If we assume 10% of the 548 million people opting for Colgate Palmolive’s new caffeine releasing toothbrush, this would translate to around 55 million additional toothbrushes sold worldwide.  In using this number we acknowledge that the penetration might be much smaller for caffeine drinkers specifically, but the company plans other variants in addition to caffeine so this could still help us gain an estimate on the potential size of all of Colgate’s new toothbrushes.
Colgate Palmolive charges a premium of over 200% on its medicinal toothpastes like Colgate Sensitive Pro-Relief over Colgate Regular. If the company decides to charge a similar premium on its new line of toothbrushes, we can assume it to charge about $6 more than its regular ones. This translates into additional revenue of $330 million for the company. If Colgate introduces toothbrushes infused with other chemicals as discussed above that are better received like fruit flavors for instance, the revenues could see a multi-fold rise. The current market size for oral care products is about $28.6 billion. The additional revenue from the new toothbrush could boost Colgate Palmolive’s market share by almost 2%, which could make the stock’s add about 5% to its intrinsic value.Notes: