Colgate-Palmolive - History, Evolution, Present and the Future

History & Origin . . . . . . . . . . . . . . . . . . . 3

Early Evolution . . . . . . . . . . . . . . . . . . 4

Modern Business . . . . . . . . . . . . . . . . 6

Global Expansion . . . . . . . . . . . . . . . 9

Company Structure . . . . . . . . . . . . . 11

Recent Efforts . . . . . . . . . . . . . . . . . . 13

Company DNA . . . . . . . . . . . . . . . . . 21

Summary . . . . . . . . . . . . . . . . . . . . . . 23

Social Media Accounts . . . . . . . . . . 24

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Established in 1806 and founded by William Colgate

Once called William Colgate and Company

First priority was to manufacture and sell soaps and candles

After William’s death, Samuel Colgate, William’s son, inherited the

company in 1857

Samuel produced new and improved scented soaps in 1866

Colgate launched Cashmere Bouquet, the America’s first milled,

perfumed soap in 1872

A year later, Colgate launched toothpastes sold in jars

Peet Brothers of Kansas City and B. J. Johnson Soap Company of

Milwaukee were its major competitors

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In 1890, Colgate toothpaste’s first real breakthrough came when

the company introduced the collapsible tube which was refined in

1908

In 1898, with B.J. Johnson Soap Company, Caleb Johnson made a

new breakthrough in creating soap by using olive palm oil

In 1909, St. Louis Exposition, a French machinery was discovered

for making hard-milled soaps

Caleb immediately purchased and from that moment, Palmolive

assumed its modern form.

In 1910, Charles Pearce, Johnson’s Sales and Advertising Manager

together with Lord & Thomas advertising agency crafted a long-

running campaign that created a whole new category: “luxury

soap”

The luxury soap costs more, Pearce’s solution was a value-based

promotion – buy two, get one free. It turned out well and company

was renamed the Palmolive Company

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In 1911, Colgate distributed 2 million tubes of toothpaste and

toothbrushes to schools and sent in hygienists to demonstrate

brushing techniques

Simply getting more people to brush their teeth has remained a

key strategy up to this day

Toothpaste was Colgate’s key differentiator

In 1927, Palmolive Company merged with Peet Brothers Company

In 1928, they finally merged with Colgate Company that created

$100 million turnover business

The newly merged company was initially ran by Palmolive-Peet’s

management

In 1933, Colgate-Palmolive stock bottomed at 7.

Colgate family bought back control, positioned Bayard Colgate as

President, with Charles Pearce being the Chairman

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In 1960’s, Colgate - Palmolive made no purchases

Appointed new president, George H. Lesch, successfully shifted

some of the foreign success back into the parent company.

George’s initiatives shaped the modern day company: a ramped-

up innovation program, funded by an aggressive and constant

pressure on costs.

Task forces were set up:

Look at every aspect of product cost

Process and management

Taking out anything that did not add consumer value

In 1967, sales doubled the 1961 record of $500 million

In 1970’s, purchased Wilkinson Sword razor and blades, Kendall &

Company, Helena Rubinstein cosmetic business, Ram Golf

Company, Bancroft Racket Company and Penfold Golf Balls

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The acquisition that had a long-term benefit came in 1976, with

the purchase of Riviana Foods

Toothpastes and washing needs’ format, became powerful product

innovation tools

In 1983, launched Colgate Total toothbrush

Two years after, launched Protex antibacterial soap

Purchased Softsoap and Vipont Pharmaceutical’s oral hygiene

products in 1987

In 1990’s, acquired Murphy-Phoenix Corporation, Mennen Co. and

S.C Johnson’s liquid soap brands in Europe and Australasia

This made Colgate the worldwide leader in liquid soap.

In 1992, Colgate Total toothpaste was launched overseas.

Its launch in America was delayed for five years, owing to a

convoluted FDA approval procedure for its gingivitis-fighting claim

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It was the company’s biggest-ever launch.

It then enjoyed market leadership in the U.S for the first time.

In 1995, the company penetrated Central Europe and Russia

Major acquisitions such as Kolynos Oral Care in Latin America,

rapidly extend their market share.

The oral care in Latin America market reached a staggering 79%.

Further progress in the oral care market, with Colgate Simply White

Gel and Total Plus Whitening

The continued growth of Hill’s convinced them that its future was

more in these two areas than in a toe-to-toe laundry care battle

with P&G.

In 2000’s, Colgate began to shed its detergent products.

Sold its Mexican brands to Henkel in 2001 and 2003

German American Business Association (GABA), increased

Colgate’s total European market share from 27% to 33%. 8

In 1913, Colgate Canadian subsidiary was set up and Palmolive

subsidiary began exporting Palmolive soaps to Britain

In 1920s, started exporting Colgate products to Australia, United

Kingdom, Germany and Mexico

In 1933, Colgate subsidiaries were set up in several South

American countries and a factory was established in the U.K.

Colgate Company acquired Cadmun in France, Binder-Ketels in

Germany and local operations in Sweden, Italy, Poland and

Switzerland

In 1938, Goodwin & Sons of Manchester, England fell to Palmolive,

whose UK production began in October 1939

In 1940, German bomb flattened the London Colgate factory

In 1949, Colgate Britain production had been re-established at the

Manchester Palmolive factory

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Brands such as Ajax cleanser and Fab detergent, both launched,

and quickly became very successful

New factories appeared in France, Italy, Denmark, Switzerland,

Spain, Greece, Belgium, Portugal and Ireland.

In 1950s/60s, European successes encouraged Colgate-Palmolive

to look further afield

Set up operations in developing markets such as Malaysia,

Thailand and India, that only produce Colgate products

As early as 1961, over 50% of sales were coming from outside the

United States

In 1970’s, Colgate-Palmolive was well established throughout

Europe, Asia, South America and even Africa

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The structure of Colgate-Palmolive remained extremely consistent,

with little to distract managers from their day jobs of generating

growth and cutting costs

The company competed in four core segments with a tightly

focused range of key brands:

Oral care (primarily Colgate brands)

Personal care (Palmolive, Mennen, Irish Spring, Softsoap)

Home care (Ajax, Fab detergent, Suavitel fabric softener,

Murphy’s)

Pet nutrition (Hill’s Science Diet, Hill’s Prescription Diet)

They now operate in over 200 countries, in 4 regions, North

America, Latin America, Europe and Asia/Africa

In 2006, a structural change came when it was seen that the

regional arrangement was too crude

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The developing Eastern European markets were moved to the

similarly developing Africa/Asia region.

The developed Australia/South Pacific moved the other way into

developed Western European Group

Only Hill’s is geographically undifferentiated.

Operating as a discrete 5th division of the company.

It remained responsible for worldwide sales of its brands, primarily

through vets and specialist pet food stores

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2004

For the company, this year was a milestone.

Sales topped $10 billion for the first time, driven by a 7% increase

in sales, led largely by volume growth.

Colgate toothpaste reached a record of 35% market share.

The company increased its global toothpaste market share by

1.2%, across more than 100 countries, with a record 33% in China

and a rapidly rising 17% in Russia.

In the Philippines, Palmolive Naturals and Aromatherapy shampoo

brands had added 10 points to their shampoo market share

Colgate Max Fresh and Colgate Simply White were complimented

by new formats of existing brands

Mennen was extended from stick format to roll-on and aerosol

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2005

Volume growth increased sales by nearly $1 billion

A volume growth of 6.5% after three years in the doldrums in

America

Products like Ajax Ruby Red Grapefruits, Palmolive Oxy Plus

washing-up liquid, Irish Spring MicroClean soap, Softsoap Kitchen

Fresh Hands and Softsoap Shea Butter liquid soap exemplified

Colgate’s skill in extending brands, through both line extensions

and across categories.

Colgate Total, Colgate Luminous and Colgate Max Fresh produced

further market share gains.

A company-organised network of dental hygienists helped refine

advertising for the Colgate 360 manual toothbrush

In support, global advertising spend increased by 12% to a record

high of almost $1.2 million, a 33% increase in only three years. 14

2006

A 7% increase in sales volume, added almost another $1 billion to

the top line, with every division performing well.

Their strategies embodied tight focus on the consumer, increased

marketing spending, new ways of communicating, building

consumption in emerging markets and steady stream of innovation

80% of sales were now coming from outside North America

In newly emerging markets, India and China, meant reaching

millions of small outlets whose small purchases accounted for the

majority of retail sales

Colgate products were now available in 5 million outlets.

Sales in Latin America grew 15% to $3 billion, driven by a 10%

increase in volume, on top of a 16% growth the previous year, with

sales growing in every single market

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The company’s primary drivers were its premium brands

Colgate Total

Colgate Sensitive

Colgate Max Fresh

Colgate 360 toothbrush

Palmolive Nutri-Milk

Lady Speed Stick

It sold the Latin American and Canadian bleach brands Javex, Agua

Jane and Nevex

Acquired Tom’s of Maine, a natural toothpaste business that sold

through health and specialty stores.

2007

Gained another $1 billion, up by 7%

Reported a record margin of 57.3%.

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Toothpaste, manual toothbrushes, mouth rinse, bar soaps, shower

gels and fabric conditioners made new global market share

records.

Colgate Total Advanced Clean and Colgate Max Fresh BURST were

driving sales and margins.

A moisturizing technology had been incorporated into Palmolive

and Soft-soap ranges

Hill’s range benefited from new variants of Prescription Diet and

Science Diet ranges

Produced Colgate 360 manual toothbrush with Colgate 360 Sonic

Power battery toothbrush

Launched a pharmacy-based information campaign about Colgate

Total’s ability to fight gingivitis.

Bright Smiles, Bright Futures, a 17 year-long campaign, goes

through to over 500 million children in 80 countries. 17

2008

Increased by 11% in the top line to a new high of $15.3 billion

An increase of 5.5% was recorded from price increases

In Latin America, net selling prices increased by 9.5%.

Prices in Europe/South Pacific rose by 5.5%

Hill’s prices rose even more, by a full 10.5%.

Innovation process continues to deliver more winners like Suavitel

Magic Moments and was taking Latin America and Europe by storm

Dedicated teams of research and development staff focused on

conducting early research and energetically researching innovation

inside and outside the company, linking hopeful technology to

consumer needs

Colgate formed an alliance with The Forsyth Institute to increase

the size of the professional sales force.

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2009

The continued price rise by 6% finally had an impact.

With flat sales and volume, the gross profit margin increased by

2.5%.

Resulted in a new sales high of 58.8%

Promoted Colgate Wisp, a new portable mini-toothbrush, with a

breath-freshening bead for use without water

Colgate Total Enamel Strength, Colgate Sensitive Enamel Protect

and Colgate Max White with Mini White Strips made useful progress

across several markets.

In Latin America, Colgate’s share of the soap bar market, helped by

the launch of Palmolive Nutri-Milk, reached a new high of 28%, on

top of the company’s dominance in oral care.

3% volume growth in Latin America came with prices hikes of

13.5%.

2010

Greater Asia/Africa increased its sales by $350 million

A 10% increase in volume, primarily in China, Thailand, Philippines,

Malaysia, Turkey, Russia and India

Shares of the growing toothpaste market reached a record of

51.5%.

North America, sales grew by 3.5%.

Volume declined further by 2%, despite price reductions.

Worst hit were the U.S., Russia, Japan, France and Germany,

prompting more price reductions and decrease in pack size

Differing set of challenges in the two halves of Colgate’s business,

developed and developing markets.

In North America, price pushed down by 3%, but improved volume

by 2%

In the end, the gross margin rose to 59.1%. 20

Emerging Markets

Colgate’s geographic spread is astounding.

A brand strength and brand leadership in the 21st century’s fastest

growing economies.

In 2011, Colgate was ranked as the Most Trusted Brand by The

Economic Times of India, not just in toothpaste but across all

product categories.

Relationships with Professionals

Power of professional recommendations in driving new products

and establishing long-term loyalty has reaped enormous dividends

and been backed by considerable resources.

Professional input is sought extensively in product and advertising

development.

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Colgate also courts professionals in emerging markets.

Giving the best not only to their consumers but also to their

employees, by awarding them dental check-ups.

Colgate is now the toothpaste most recommended by dentists in

37 countries.

It was a depth of relationship exceptionally hard for a competitor to

loosen.

Cost Control

Keeping the business simple, it moves far beyond slash and burn

approaches and using creativity to find cheaper, better ways to do

things.

On-going Funding-the-Growth initiatives have usually generated

between $300 and $700 million in savings each year.

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Colgate-Palmolive has always been the underdog but to have

survived and prospered in the face of such competition is

testament to both sustained brand strength and sustained

management skills.

Remained more tightly focused in terms of product categories and

more expansive and imaginative in terms of geographical location.

Trading consumers up to premium products, divesting low margin

businesses, acquiring high margin ones, developing strong brands

that can support premium prices, and always keeping the tightest

of grips on costs; those have been its highly successful tricks of

the trade.

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