Spain as the Global Launch Pad for Clear Aligner Brands
What is common among Invisalign and Spark – the top two brands that witnessed highest YoY revenue growth during FY 2021? The answer goes like this – the Spanish orthodontics market enabled both brands to turbocharge their growth, and acted as a global growth catalyst. In fact, Spain is frequently used as a launch pad for leading clear aligner brands that are entering the EU market. The rationale is rather simple – the country is not only among the largest orthodontic markets in Western Europe, but also globally.
Spain has highest penetration of clear aligner treatments per 100 population.
Not just above, Spain also boasts of highest percentage of GPs offering clear aligner treatments.
Spain’s market attractiveness (partially driven by a favorable regulatory landscape) puts it in a very unique position wherein not only clear aligner brands, but also orthodontics-focused DSOs in EU (such as Impress) have used the country as a launch pad to test the waters before scaling their business to other international markets. Joining fresh to this growing list of clear aligner brands is a relatively well-known Finnish company, Planmeca Group’s less known HeySmile brand.
Planmeca Group: Reinventing the Conglomerate
Revenue Mix: low-margin, low growth categories
FY 2021 Planmeca Group exceeded USD 1.2 billion in sales revenue. However, the group’s revenue-mix is still largely limited to traditional segments that represent low-margin, low growth categories incl. dental chairs and imaging equipment. The company’s endeavor in the high-margin, high-growth category (incl. CAD/CAM) have obviously remained a failure.
Planmeca Group launched Planscan in FY 2013 – around the same time as 3Shape and ALGN launched their flagship brands. Fast forward to FY 2022, TRIOS and iTero brands dominate the global IO scanner category, whereas Planscan brand has almost slipped into obsolescence.
The company clearly took some bad strategic decisions by continuing to focus on CAD/CAM equipment with little knowhow and limited R&D budget. Despite of healthy books and a positive FCF, Planmeca Group did not acquire an emerging brand – a scenario that would have been far better off, looking retrospectively.
Unfortunately, insightsZ predicts that history would be re-written this time again with the HeySmile brand debacle.
M&A: Shopping for clear aligner brand acquisitions
Planmeca Group becomes the latest company to join the list of global manufacturers who rely strongly on M&A to acquire new capabilities. Q4 2021 Planmeca announced its transaction deal of acquiring Kavo Treatment Unit and Instrument business from Envista Holdings (NYSE: NVST). Fast forward to Q4 2022, the Helsinki-based company recently announced in its PR campaign that it has now entered the clear aligner market with its Málaga-based brand HeySmile.
So, what’s our take on the group’s recent move? Just one line – HeySmile’s brand move is set up to fail. Here’s why:
In a category wherein we witness the top brands spending millions to woo social media fans in TikTok and Instagram marketing campaigns, HeySmile’s brand presence is almost invisible. Of course, Planmeca’s brand marketing team may argue that the possible explanation for a non-existent marketing budget and below-average brand deliverables is the softer macro environment. However, that alone doesn’t justify the recent disastrous brand launch for HeySmile.
The details of the HeySmile transaction have been kept under wraps and unlike other public-listed global dental manufacturers, Planmeca Group benefits from being a private business which makes the company less vulnerable to public markets scrutiny and investors’ caprice. However, less fear of policing also makes the Finnish company more prone to poor decision making. insightsZ believes that instead of launching the little-known brand HeySmile, Planmeca would have been far better off acquiring another younger company in the clear aligner space. In other words, there is clearly a growing pipeline of clear aligner brands available on the market that promise better returns and higher growth potential than HeySmile, a brand that’s almost invisible and has probably little knowhow in terms of scale, let alone other necessary expertise.
Synergies: A weaker brand partner in IO scanner space
Planmeca has no other brands in the clear aligner space or even the broader orthodontics space which may align with HeySmile for any possible synergies. Not just that, unlike other clear aligner brands like Invisalign or Byte, HeySmile is accompanied by a rather weaker brand in the intraoral scanner category.
Even though Helsinki-based Planmeca Group entered the IO scanner category almost a decade back, nevertheless it still doesn’t feature among the top 7 global brands by market share. To summarize, unlike other leading global clear aligner brands, HeySmile brand clearly lacks a strong partner to leverage its market entry or even a possible expansion in international markets.
HeySmile Launch Event
No launch event, not even a soft launch!
The current softer macro environment, vaporizing consumer demand and inflationary pressures incentivize companies to be cautious with their marketing budgets. However, it looks like HeySmile’s brand team took the advice a bit too seriously.
No brand marketing activities, no launch event and not even an online presence – combined together these drivers do not necessarily help the brand for an effective launch.
Whether or not is it the right time for HeySmile brand launch at all?
Answering this question isn’t quite straightforward. Obviously, the global market conditions may not be conducive to launching new brands. Despite of this, we have witnessed many new clear aligner brands entering the space YTD 2022. What’s common among all of them – each of them had a way better crafted brand launch campaign than Planmeca’s HeySmile.
Poor Brand Recall
The world of clear orthodontics is brimming with brand names that include the term ‘smile’. Surprisingly enough, these brand names are also among the ones that are ‘less successful’. Some renowned examples include SmileDirectClub, XRAY’s SureSmile and STMN’s DrSmile.
What makes the brand name especially worse for HeySmile is the consumers inability to clearly identify the brand from leading UK-based teeth whitening brand HiSmile. A quick snapshot of the social benchmarking study confirms that HeySmile may almost never be able to catch up with the similar sounding British brand. Rationale: even if HeySmile now has access to Planmeca’s marketing $ budget, the British teeth whitening brand has a way stronger social presence with Instagram following exceeding +200 K. The Finnish company’s lack of marketing efforts and know-how will only further negatively contribute to confusions – eventually negatively impacting the brand’s recall rate.
insightsZ Testimony
While it wouldn’t be fair to say that the HeySmile brand launch is set up for failure. However, benchmarking the launch KPIs against both leading as well as recent clear aligner brand introductions clearly indicates that Planmeca is significantly lagging behind on all indicators.
We’d keep tracking HeySmile closely for the upcoming quarters – giving the brand a benefit of doubt that even without other synergistic brands in Planmeca’s portfolio, miracles may happen and that the brand may actually take off to become a serious contender in the space. So far, the brand’s commercial presence is limited to few locations across Spain and Nordics only.