Colgate-Palmolive following ‘premium innovation’ plans despite recession

By Kacey Culliney contact

- Last updated on GMT

In China, Colgate-Palmolive is following an even more 'ultra-premium' innovation plan across e-commerce channels [Getty Images]
In China, Colgate-Palmolive is following an even more 'ultra-premium' innovation plan across e-commerce channels [Getty Images]

Related tags: Colgate-palmolive, Oral care, COVID-19, Consumer trends, premium beauty, Prestige beauty, Innovation, Toothpaste, teeth whitening

International personal care giant Colgate-Palmolive will continue its focus on premium oral care innovation despite post-pandemic economic strain worldwide, its investor relations chief says.

In March 2021, Colgate-Palmolive’s chief technology officer said the company had made a “huge change”​ to its innovation approach​, shifting to a design-led approach considering user experience and trends from start-to-finish. And inevitably, this also meant a more premium approach​, Pat Verduin PhD, chief technology officer at Colgate-Palmolive, said later that year.

Last month, John Faucher, investor relations officer at Colgate-Palmolive, reaffirmed this stance. Addressing attendees at the virtual Evercore ISI Consumer & Retail Conference, Faucher said that despite ongoing economic pressures facing consumers in the US and worldwide, the company would continue its premium innovation pattern.

‘We’re excited’ about premium oral care promise

“The key factor as you look at a difficult economic time, which seems to be what we’re heading into (…) [is] you need to focus on the marginal consumer and where those changes are happening,” ​he said.

But for the high-end consumers, there had been very little change to spending patterns, he said, and so there remained ongoing promise for premium oral care product development.

Colgate’s premium innovation had worked thus far, he said, with the Colgate Optic White Pro series, launched in 2022, performing “incredibly well”​ and “gaining share” ​– demonstrating there remained room to premiumize at the high end of the market. “…We’re excited about that,”​ Faucher said.

But even at the mid-range space of the oral care market, he said there had not been any big trade downs from consumers – across Colgate-Palmolive’s portfolio or the wider category. Consumer behaviour, he said, was “roughly in line with expectations”.“…We’re not seeing increases in private label market share really in our categories at this point.”

Despite this, it did remain “early days” ​in terms of economic pressures, Faucher said, and Colgate had therefore also executed pricing action worldwide, alongside premium product development.

‘Breadth of price point’ and ‘ultra-premium’ e-commerce

The breadth of its portfolio enabled the company to do this, he said, and also protected business should consumers start trading down amid economic pressures.

“If consumers do trade down, we have the products that they are most likely going to look to trade to. And then also, we have very good businesses within the dollar channel which we think could also be beneficiaries,”​ he said. “So, I think we’re well prepared if it starts to happen, but, so far, we are not seeing material trade down at this point.”

Faucher said the key to maintaining stable business was offering a “breadth of price point”​ to consumers worldwide. Though, in China, Colgate’s strategy had been slightly different – expanding in the market with “ultra-premium innovation in e-commerce”, ​he said.

And this, he said, was because China was the most penetrated e-commerce market in the world for oral care, with about 30% of category business conducted via this platform, so Colgate-Palmolive had to stand out. The brand, therefore, was offering very premium products online – around four to six times more expensive than brick and mortar offerings – touting “high efficacy” ​and “better packaging”; ​designed with China e-commerce in mind. Colgate had launched whitening gum products, for example, that were performing very well, he said.

Whitening is ‘relatively underdeveloped’ in oral care

And the opportunities for teeth whitening products stretched far beyond Chinese e-commerce, Faucher said. Colgate-Palmolive’s Optic White launch in the US had proven very strong and remained the company’s highest price point toothpaste in that market, he said.

“Whitening is a segment of the category that we think is relatively underdeveloped given the desire for these benefits. And you look at Google searches – it’s such a huge topic within oral care as people look to have whiter teeth and people are willing to pay more for that benefit,” ​he said.

Take a look at our coverage on teeth whitening regulations worldwide​, highlighting the varying market rules for product development in different countries and regions.

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