Colgate toothpaste has growth opportunity in emerging markets where brushing is rare | MDU Message Board Posts

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Msg  1772 of 3589  at  7/6/2017 9:26:18 PM  by

jerrykrause


Colgate toothpaste has growth opportunity in emerging markets where brushing is rare

 

 

Colgate toothpaste has growth opportunity in emerging markets where brushing is rare
 
 
 
With their high populations and low brushing frequencies, China and India could be places for Colgate toothpaste to grow

Colgate-Palmolive Co. could see growth in its crucial toothpaste business if it focused on emerging markets where people brush less than once per day on average, wrote Bernstein in a Thursday note.

Analysts highlight China and India.

“To start, growth in the category remains strong at +5%,” Bernstein wrote. “Although likely slower, our analysis suggests good growth should continue to be supported by volume growth from penetration, as there are still markets where consumers brush their teeth less than once per day.”

In the most recent quarter, Colgate-Palmolive CL, -0.42% reported flat sales totaling $3.76 billion. In Latin America, which accounted for 25% of company sales, the company maintained its leadership position in toothpaste, and gained market share in places like Mexico, Peru and Puerto Rico. Sales increased 9% in the region.

In both North America (which accounts for 20% of company sales) and Europe (15% of sales), there were 5% sales declines.

Africa and Eurasia (6% of company sales) experienced a 6.5% increase in sales, with its toothpaste brands gaining share in places like Saudi Arabia, Morocco and Qatar. Asia Pacific accounts for 19% of company sales, and sales for the quarter fell 3%. There were volume declines in India and Greater China.

Bernstein notes that there has been strong per capita consumption growth of toothpaste use in China and India, with populations of 1.4 billion and 1.3 billion respectively.

“This implies plenty of opportunity for companies like Colgate-Palmolive to continue to drive category growth in the form of volume if they can educate and instill improved oral hygiene habits in consumers, increasing brushing to two times or more per day.”

In the most recent quarter, Colgate-Palmolive CL, -0.42% reported flat sales totaling $3.76 billion. In Latin America, which accounted for 25% of company sales, the company maintained its leadership position in toothpaste, and gained market share in places like Mexico, Peru and Puerto Rico. Sales increased 9% in the region.

In both North America (which accounts for 20% of company sales) and Europe (15% of sales), there were 5% sales declines.

Africa and Eurasia (6% of company sales) experienced a 6.5% increase in sales, with its toothpaste brands gaining share in places like Saudi Arabia, Morocco and Qatar. Asia Pacific accounts for 19% of company sales, and sales for the quarter fell 3%. There were volume declines in India and Greater China.

Bernstein notes that there has been strong per capita consumption growth of toothpaste use in China and India, with populations of 1.4 billion and 1.3 billion respectively.

“This implies plenty of opportunity for companies like Colgate-Palmolive to continue to drive category growth in the form of volume if they can educate and instill improved oral hygiene habits in consumers, increasing brushing to two times or more per day.”

“This makes us worried about the safety of Colgate-Palmolive’s organic topline annuity stream going forward, as homegrown players have differentiated themselves around historically and culturally significant offerings that are difficult for Colgate-Palmolive to replicate (at least at the same level of authenticity and without acquisitions),” analysts wrote at the time.

Analysts note that Colgate-Palmolive is launching more “natural” products with local appeal, but success is uncertain.

Colgate Palmolive shares are down 0.3% in Thursday trading, but up 12.4% for the year to date. The S&P 500 index SPX, -0.94% is up 8.2% for 2017 so far.



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