Premium Opportunities for Colgate

Things are looking up, for the US economy and Colgate. Jobless claims decreased by 23,000 to 340,000 in the week ended May 18, according to a report released today by the Labor Department. Analysts say the decline in layoffs could lead to an increase in hiriing. The US economy may be gaining strength, but weakness remains in FMCG.

Speaking at Barclay's Americas Select Franchise Conference yesterday, Noel R. Wallace, president of Colgate North America & Global Sustainability, pointed out that historical category growth in the US is about 3.5% for the segments that Colgate competes in.

“Right now, in aggregate, in the categories in which we compete, it's growing around 2%; continue to rise commodity prices in 2012, very promotion-oriented consumer,” he observed.

Yet, consumers remain receptive to highly innovative products, which Colgate has delivered for several quarters. First quarter, organic topline growth rose 6%, which was spread throughout the globe. In the US, Colgate's sales rose 3.3%, and were well balanced between pricing and volume as volume rose 1.8%, pricing increased 1.6%. He credited those gains, in part, to the succes of the premium priced Optic White oral care line, which debuted in the US and is rolling out globally. Optic White whitens teeth with stabilized hydrogen peroxide and also improves the shine of teeth.

“Superpremium is an opportunity for us across North America,” explained Wallace. “Historically, our business is under-indexed in the superpremium area. So we've been very focused on making sure that we continue to elevate benefits and strategies in order to drive our share position in that area.”

A new Colgate toothbrush featuring bristles that are 17 times slimmer than normal bristles is another example of a high end product. Another is the 2012 Q3 launch of Colgate Total Sensitive. Now, the company is launching Colgate Total Mouthwash.

“We're No. 1 in both toothpaste and toothbrushes globally,” explained Wallace. “We have yet to be No. 1 in mouthwash.”

He hopes to change that with Colgate Total Mouthwash, which will be priced at the very high end of the market. It's based on 12-hour protection even after eating and drinking. It's priced 123 index to the market average, but Wallace is confident that consumers will see the benefits.

“The trade is endorsing it,” he explained. “They see this as a significant entry from a very, very strong oral care brand. And what they've done for us, which is very unique for a launch, is not only do we have a great positioning on the mouthwash shelf, but the trade is very focused now on driving regiment.”

According to Wallace, retailers want to take mega-brands like Colgate and find ways to drive the adjacency categories such as toothbrush and mouthwash.

“Mouthwash has a 51% penetration in the US, so you can see the opportunities to drive more penetration are quite significant for the trade,” he noted.

Shoppers may be frugal when it comes to some purchases, but when it comes to oral care, the US consumer is putting her money where her mouth is.