Colgate Prudently Focuses on Buoying Brand Spending to Boost Its Competitive Edge

While concerns abound around consumers' financial health and ultimately their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we think the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, Colgate's strategy has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and expeditiously responding to evolving consumer preferences. In this context, Colgate has worked to bring products to market in just six months-12 months in some cases, down from 18 months-36 months historically. The prudence of this course has been evident, as Colgate chalked up 24 consecutive quarters at or above its 3%-5% long-term organic sales growth target (through the end of fiscal 2024). We think this reflects its renewed focus on consumer-valued innovation across price tiers as well as elevated brand spending; the company has spent 12% of sales on marketing on average the past five years, 160 basis points above the level directed in 2017-19.