|Industry||Fast Moving Consumer Goods|
|Headquarters||New York, New York, United States|
|Revenues||$16.471 Billion (2020)|
|Profit||$10.017 Billion (2020)|
|Competitors||Unilever, Procter & Gamble, Close Up, Sensodyne, Oral-B, Aim, Aqua Fresh|
Unknown to William Colgate when he started a starch, soap, and candle business in the 1800s that his little company would be a household name 200 years later. In 1928, Colgate & Company was bought by B.J. Johnson from Palmolive-Peet Company, who developed the world’s best-selling soap, Palmolive. The company was later shortened to Colgate-Palmolive in 1953 (Britannica). Colgate-Palmolive Company has a diversified portfolio. They manufacture and distribute household and commercial cleaning products, dental and personal care products, and pet foods. Colgate-Palmolive’s revenue has been moving upwards since 2017. In 2020, their annual revenue is at $16.471 billion, a 4.96& increase from 2019. The annual gross profit for the same year is $10.017 billion, an increase of 7.42% from the previous year (Macrotrends, 2021). Despite the increase in raw materials cost, the volatile consumer demands, and the uncertainty of the COVID-19 pandemic, Colgate continues its strong growth momentum. In Q2 2021, Colgate announced net sales increased 9.5%, organic sales increased 5.0%. Its leadership in toothpaste continued with its global market share at 39.3% year to date (Colgate-Palmolive, 2021).
Colgate Strengths 2021:
- Company Values.
The success of Colgate is attributed to the company’s values of caring and global teamwork. They are committed to acting with compassion, integrity, honesty, and high ethics. They are protectors of the global environment. Over 37, 700 employees drive their success (Colgate-Palmolive, 2021).
- Market Leader.
Colgate is one of the leading brands in the saturated and competitive market for personal care and household products. Colgate is a household name with high recall and visibility. According to Statista (2020), Colgate is a leading global FMCG with a brand value of about $9 billion and top 2 of the leading personal care brands worldwide, value amounting to around $17 billion.
- Assorted product line.
Colgate’s wide variety of products include oral care, personal care, fabric care, and pet foods. A good product mix is essential for FMCG businesses to increase market presence and have a sustainable business strategy.
- Strong distribution and supply chain.
Colgate Palmolive uses different marketing strategies and channels for its products. As their products are daily useable commodities, they use Multichannel distribution, which makes them accessible to consumers. It operates in over 75 countries and sells in more than 200 countries (Colgate-Palmolive, 2021).
- Continuous improvement.
Colgate understands and adapts to consumers’ needs and expectations. They continuously work to innovate and improve their products and services. Colgate has topped Fast Company’s 2021 list of the World’s Most Innovative Companies for developing a first-of-its-kind recyclable plastic tube and openly sharing this technology with third parties (Business Wire, 2021).
Colgate Weaknesses 2021:
- Saturated market.
The number of businesses producing personal and household products is saturated. These companies are competing to get another’s market share. Colgate’s long history makes it still the most trusted brand, but it should develop and diversify its portfolio to beat its rivals.
- Commoditized brand name.
Colgate is a popular brand in the oral hygiene market that many consumers have commoditized. Other players have also copied the brand and its strategies and brand them as their own.
- Less profitable products.
Most profit of Colgate-Palmolive comes from Colgate oral care. As per Statista (2021), oral care products accounted for 44% of global sales for the company in 2020, 21% comes from personal care, 18% for home care, and 17% for pet nutrition.
Colgate Opportunities 2021:
- Additional products.
While Colgate-Palmolive has a good mix of useful and consumable products in five major categories such as oral care, personal care, household care, fabric care, and pet nutrition, it will be beneficial if they can add more products to their line. They should take advantage of people’s purchasing power. Broadening their product line in different markets would meet consumers’ needs, therefore, improving their revenue.
- Tapping rural markets and urban areas.
Colgate has yet to tap emerging markets and increase penetration in urban areas. They should focus on areas where the toothpaste market is lucrative. In China, the toothpaste and toothbrush manufacturing industry is forecasted to grow as an increase in awareness and standards of consumers living conditions is improving. The industry revenue is predicted to increase an annualized 5.1%, reaching $6.1 billion in 2025 (GMA, 2020).
Colgate Threats 2021:
- Intense competition in the market.
Since there are more players in the market, international and local players, it would be hard to stand out. Colgate may have an edge being a household name, but consumers would experiment between brands and choose differently every time.
- Price of raw material.
The raw material costs increase even pre-pandemic, but even more so during the pandemic. According to Colgate CEO Noel Wallace, the decrease in operating profit was due to higher raw and packaging material costs (Colgate-Palmolive, 2021). This issue might lead to an increase in Colgate price.
- Issue related to animal testing.
While Colgate is committed to working toward the elimination of laboratory safety using animals, they admit to using animal tests when they can’t other appropriate means to ensure the safety of their consumers (Colgate-Palmolive). This may negatively affect the company’s branding.
Colgate SWOT Analysis Conclusion:
Colgate has a strong and efficient marketing strategy that made them a household name. For most people, when someone mentions toothpaste, Colgate comes to mind. Other products in the Colgate-Palmolive umbrella are good, but not as profitable as Colgate. Since their products are consumable needs, Colgate-Palmolive is expected to grow in the market for a long time. However, the market is saturated and competitive. Colgate needs to improve their marketing strategies for its other products. They should expand their product line and add more innovative products, hopefully, products that are animal cruelty-free, as this branding can lose them a lot of customers. Furthermore, they should focus their strategies on emerging markets where they can increase their sales targets and market share.
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- Macrotrends, (2021). Colgate-Palmolive Gross Profit 2006-2021 | CL. [online]. Macrotrends.
- Britannica. Colgate-Palmolive Company American company. [online]. Britannica.
- Colgate-Palmolive, (2021). Colgate Announces 2nd Quarter 2021 Results. [online]. Colgate-Palmolive.
- Statista, (2020). Brand value of the leading FMCG brands worldwide in 2020. [online]. Statista.
- Statista, (2021). Share of global sales of Colgate-Palmolive in 2020, by product segment. [online]. Statista.
- Business Wire, (2021). Colgate-Palmolive Honored as one of Fast Company’s Most Innovative Companies of 2021. [online]. Business Wire.
- Colgate-Palmolive. Our Commitment to Animal Welfare. [online]. Colgate-Palmolive.
- GMA, (2020). Toothpaste in China : a $4.8 billion Market. [online]. Gentlemen Marketing Agency (GMA).
- Cision, (2020). Global Toothpaste Market Trajectory & Analytics Report 2020: Herbal and Natural Toothpastes Give Tough Competition to Conventional Toothpastes. [online]. Cision PR Newswire.