Colgate-Palmolive Company

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Colgate-Palmolive Company

founded: 1806

Contact Information:

headquarters: 300 park ave. new york, ny 10022 phone: (212)310-2000 fax: (212)310-3405 url: http://www.colgate.com

OVERVIEW

Colgate-Palmolive is the nation's leading manufacturer of toothpaste, with a strong presence in the personal care, household cleaning, and pet food sectors as well. The company's Colgate brand toothpaste moved into the number one position in 1997, displacing Procter & Gamble's Crest brand, while Palmolive leads in the liquid dishwashing detergent field. Ajax, the company's long-time abrasive cleanser, is literally a household word, and various Colgate-Palmolive brands such as Murphy Oil cleaning products and Irish Spring soap have benefited from popular advertising campaigns. Fab laundry detergent and Mennen deodorant (a brand acquired in 1992) are also among the leading competitors in their areas, and Science Diet is the top seller among premium pet foods.

The company has an enormous global presence with plants in 75 countries and products available in virtually every nation in the world, including Australia, Brazil, Canada, China, Colombia, France, Italy, Mexico, Thailand, and the United Kingdom.

COMPANY FINANCES

Colgate-Palmolive posted a net income of $740 million on revenue of $9.06 billion in 1997, compared with a net of $635 million on sales of $8.75 billion in 1996. Net income rose more than 16 percent between 1996 and 1997. Colgate reported net earnings of $172 million on worldwide sales of $8.36 billion in 1995, compared with net income of $580 million on sales of $7.14 billion in 1994. The company reports that it has paid dividends on its common stock since 1895 with the size of dividends paid per share increasing for the past 35 years.

ANALYSTS' OPINIONS

Market observers are positive about Colgate-Palmolive, given its stability and its continued growth. The company overcame negatives associated with its rampant acquisitions in the 1970s divesting itself of many of the holdings in the following decade. In August 1995, however, Business Week sounded an ominous tone when it described Colgate as having been "caught off-guard" by competing specialty toothpaste brands bearing a higher price tag and greater status. That same year Barron's reported that investors were disappointed by slower growth in earnings for a number of companies, including Colgate-Palmolive; but as the magazine reported, optimism for the company's future remained high.

HISTORY

Colgate-Palmolive was formed by the merging of two companies. William Colgate established the Colgate Company, manufacturer of starch, soap, and candles, in New York City in 1806. B.J. Johnson entered the soap business in Milwaukee in 1864 with the first factory for what would eventually become the Palmolive Company. The two did not merge until 1928, when Colgate was already more than a century old.

By its 100th anniversary, Colgate's product line included more than 600 types of perfume and almost 200 types of soap. Although it began life as a soap distributor and would ultimately merge with Palmolive, the company made its name with toothpaste, which it first produced in 1873. In 1896 Colgate became the first toothpaste brand to be packaged in tubes.

Two years later, the B.J. Johnson Soap Company introduced Palmolive, a "floating" soap. It opened its first overseas facility; a factory in Toronto, Canada, in 1913; and began selling in England during the same year. In 1916, the Johnson company incorporated and changed its name to Palmolive in recognition of its popular brand. It remained Palmolive until 1926 when it merged with Peet Brothers to form Palmolive-Peet.

Colgate became a publicly traded company in 1908 and saw duty in World War I by producing protective coatings to counteract the effects of poison gas. In 1928 Colgate merged with Palmolive-Peet. The new company, Colgate-Palmolive-Peet, might have proceeded with a proposed merger involving Hershey and Kraft, but the 1929 stock market crash put an end to those plans.

The company introduced Fab laundry detergent and one of its best-known products, Ajax cleanser, in 1947. Six years later it became the Colgate-Palmolive Company and in 1956 established its headquarters on Park Avenue in New York. The company introduced a series of innovative products in the 1960s, and endured troubled times in the 1970s with a series of unprofitable acquisitions. It sold off most of its questionable acquisitions during the 1980s. With the acquisition of the Mennen Company in 1992, Colgate added a deodorant/antiperspirant line to its already established lines of personal care and household products.

STRATEGY

Colgate-Palmolive has long been an innovator in products and packaging. Just as Colgate was the first toothpaste brand to be packaged in tubes, in 1984 Colgate-Palmolive introduced the first toothpaste pump. The company introduced a series of firsts, including the first cold-water laundry detergent (Cold Power, 1965), cosmetic toothpaste (Ultra Brite, 1968), concentrated detergent (Fresh Start, 1980), and automatic dishwashing liquid (Palmolive, 1986.)

Like many other consumer product manufacturers, Colgate-Palmolive has relied heavily on extensive and repetitive advertising. In the fall of 1996, Advertising Age predicted that the company would spend $32 million on advertising a new whitening toothpaste and $15 million on a campaign for the new Lady Speed Stick Invisible Dry deodorant. Palmolive's success in the 1970s could partially be attributed to the well-known series of advertisements depicting Madge the manicurist, who regularly placed her clients' hands in bowls of Palmolive—thus emphasizing that the detergent was gentle on hands. Also highly effective was the Irish Spring commercial from the same era, which played on gender identification with certain brands, using the slogan (delivered by a woman with an Irish accent), "Manly, yes, but I like it too."

The company has emphasized oral hygiene and good health in its marketing campaigns for Colgate toothpaste, leaving the "sex appeal" to its Ultra Brite whitening toothpaste. (In the 1970s when Ultra Brite first used that phrase in its advertising, it was considered somewhat daring.) From there the toothpaste manufacturer concentrated on products that fight cavities, plaque, and tartar. For instance, in 1986 Colgate-Palmolive introduced tartar-control Colgate, a contrast with specialty brands that, as Business Week observed in an August 14, 1995 ariticle, "[focus] on things other than the therapeutic benefits of toothpaste."

INFLUENCES

Colgate-Palmolive seems to have fared best when it stayed closest to its core product line of personal care, laundry, and household cleaning items. In the 1970s, management attempted to diversify, purchasing not only Helena Rubenstein, whose cosmetic line might have seemed in keeping with the company's personal care items, but such wide-ranging enterprises as Ram Golf and Maui Divers. These endeavors did not prove to be successful, and Colgate-Palmolive divested itself of these properties, as well as its Etonic shoe line, in the 1980s.

In late 1996, Colgate-Palmolive met its leading rival, Procter & Gamble (P&G), in court over a dispute involving a Colgate ad that P&G claimed was a copy of its own Crest commercial. This was not the only time that year the company faced advertising difficulties. The company was forced to withdraw an Australian sunscreen ad because it received criticism for alleged racial overtones. Generally, though, advertising has been a strong suit for Colgate-Palmolive, as it must be for marketers of personal care products.

CURRENT TRENDS

The year 1994 marked a milestone for Colgate-Palmolive marketing strategy. In that year, the company made a shift from its traditional pricing structure, based on special promotions, to the more low-key "everyday low pricing," which emphasized purchasing on the basis of need rather than high-powered promotions.

FAST FACTS: About Colgate-Palmolive Company

Ownership: Colgate-Palmolive Co. is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: CL

Officers: Reuben Mark, Chmn. & CEO, 59, 1997 base salary $1,222,500; William S. Shanahan, Pres. & COO, 57, 1997 base salary $756,167; Lois D. Juliber, Exec. VP & COO, Developed Markets, 48, 1997 base salary $450,000

Employees: 37,800

Principal Subsidiary Companies: Colgate-Palmolive has 237 subsidiaries worldwide, including Hills Pet Nutrition Inc., Mennen Company, Murphy Phoenix Company, and Softsoap Enterprises Inc.

Chief Competitors: Colgate-Palmolive's competitors include: American Home Products; Amway; Avon; Gillette; and Procter & Gamble.

In 1994 the company launched its largest series of new products in a decade: Colgate Toothpaste with Baking Soda & Peroxide, Irish Spring Waterfall Clean Soap, Palmolive Antibacterial Dishwashing Liquid, and the Murphy Kitchen Care line. In the mid-1990s it also introduced Colgate Plus Ultra Fit Compact Head toothbrushes, and in December 1996 it introduced Lady Speed Stick Invisible Dry Deodorant. With concerns over germs growing in the 1990s, antibacterial soaps became popular, and in 1996 Colgate announced the introduction of Irish Spring Sport, an antibacterial product intended to compete with a "body wash" produced by Procter & Gamble. The company anticipates continued global success with present and future products.

PRODUCTS

Colgate-Palmolive has a wide line of products in the following areas: personal care, household and fabric care, pet nutrition, and assorted specialty items. Colgate-Palmolive's personal care line includes Colgate toothpaste; Mennen, Speed Stick, and Lady Speed Stick deodorants; Skin Bracer after shave; and Irish Spring deodorant and Palmolive cosmetic soaps. Palmolive is also a brand in the household/fabric care area with its dishwashing liquids and powder. Also included in this area are Ajax, Fab laundry detergent, Murphy Oil soap, and Handi Wipes. With the acquisition of Hills Pet Products in 1976, Colgate-Palmolive entered the pet food business, with specialty dietary management products HealthBlend and Science Diet, as well as Prescription Diet, a line available only through veterinarians. Finally, through its subsidiary, Princess House, Colgate-Palmolive manufactures crystal and giftware.

CORPORATE CITIZENSHIP

Colgate-Palmolive has pursued an outstanding program of corporate citizenship, both globally and locally. In 1987 the company announced plans for a significant redevelopment of the Jersey City, New Jersey, waterfront plant. The revitalization plan, for which ground was broken in 1990, included proposals for offices, parks, housing units, a hotel, and a marina. Throughout the world the company has devoted millions of dollars and thousands of person-hours to education, health, sports, and community programs, mostly targeted toward young people.

CHRONOLOGY: Key Dates for Colgate-PalmoliveCompany

1806:: Founded by William Colgate in New York to make and sell soap, starch, and candles
1820:: Colgate expands it manufacturing to a New Jersey factory to produce soaps and starch
1857:: William Colgate dies and Samuel Colgate takes over; company name is changed to Colgate & Company
1864:: B.J. Johnson opens a soap factory in Milwaukee, Wisconsin
1872:: The Peet Brothers open a soap factory in Kansas City, Kansas
1873:: Colgate begins selling toothpaste in a jar
1898:: Johnson's company creates Palmolive soap
1908:: Colgate goes public
1916:: Johnson's company incorporates and officially becomes Palmolive Company
1926:: Palmolive merges with the Peet brothers to become Palmolive-Peet
1928:: Colgate and Palmolive merge to form Colgate-Palmolive-Peet
1947:: Introduces Fab laundry detergent and Ajax cleaner
1953:: The company name changes to Colgate-Palmolive Company
1963:: Colgate-Palmolive expands by introducing Baggies, a new food wrap
1973:: Cosmetics manufacturer Helena Rubenstein is acquired
1981:: Colgate loses a suit brought by United Roasters for breach of contract
1982:: Colgate is sued by the federal government for job discrimination
1992:: Mennon Co. is purchased
1993:: S.C. Johnson Wax's liquid hand and body soap brands are purchased, making Colgate-Palmolive the worldwide leader in liquid soap
1997:: Colgate brand becomes the number one selling toothpaste

In 1987 Colgate-Palmolive helped fund the revitalization of Wadleigh School in New York City, a junior high with a crumbling infrastructure and a disastrous academic record. In addition, a "friendship school" in Cali, Colombia, built with Colgate money, provides education to children between the ages of 6 and 12. Outside Johannesburg, South Africa, is a pioneering multiracial day-care center called the Wonderland School, operated by Colgate-Palmolive. In the Philippines and many other developing countries, the company sends dentists into villages and barrios to treat underprivileged children. The company also sponsors sporting events throughout the world, most notably the Colgate Women's Games, which involve 15,000 women, and a Colgate Sports & Activity Day on the island of Fiji gives disabled participants an opportunity to compete.

GLOBAL PRESENCE

Colgate has an enormous global presence. The list of countries where no Colgate-Palmolive products are sold (North Korea, Mongolia, Iran, Cuba, Somalia, and a handful of others) is far shorter than the one listing the 194 (at last count) nations in which its products are available. By contrast, the United Nations in 1997 had only 185 members. The company's global expansion began in the early part of the twentieth century, and by 1997 it had plants in 75 countries.

Although Colgate-Palmolive has established itself in most parts of the world, it continues to seek new segments of international markets, especially in developing countries. In 1996, the company undertook a remarkable promotional activity that combined corporate citizenship with a forward-thinking strategy of marketing. Colgate "video-vans" throughout India began distributing free toothpaste samples to rural villagers. The Indian villagers, the vast majority of whom were not exposed to Western-style oral care (including toothpaste), represent a potential market of more than 600 million people. In the Western world, Colgate-Palmolive continues to develop new variations on traditional soap and toothpaste products.

EMPLOYMENT

Colgate-Palmolive's public relations presents the company work force in a glowing light, emphasizing diversity and stability. Its 1995 annual report, for instance, listed numerous top management personnel who had served the company for one, two, and even three decades, along with in-depth commentary from a wide range of managers. While diversity was a popular buzzword in corporate America in the 1990s, it seems to have come naturally to a company with offices and plants on every continent except Antarctica. As the 1990s neared an end, optimism for the company's future remains high.

Colgate-Palmolive's recruiting and employment practices have received praise from Personnel Journal, which awarded the company's human resources department its "Global Outlook Award" for 1995.

As for stability, although the corporation has gone through numerous mergers, acquisitions, and divestitures since its founding, the core entity has existed since 1806, an impressive record in the ever-shifting world of corporate America. In 1995 the company announced plans to downsize 3,000 jobs and either close or reconfigure 24 of its facilities over the next three years.