Colgate Prudently Working to Steady Its Competitive Position Even as Unrelenting Headwinds Swirl

While headwinds abound stemming from rampant cost inflation and a strangled global supply chain, we think Colgate-Palmolive is navigating the uncertain landscape quite astutely. With CEO Noel Wallace, the firm's strategic focus has centered on elevating research, development, and marketing spending (on its core mix, within adjacent categories, and throughout the digital realm) and responding to evolving consumer preferences more expeditiously (bringing products to market in just six to 12 months in some cases, down from 18-36 months historically). The prudence of this course has been evident as Colgate has chalked up 12 consecutive quarters of 3%-5% organic sales growth, in line with its long-term aims. We attribute these results to the firm’s renewed focus on consumer-valued innovation, even that which comes with a higher price, as well as cultivating its fare with elevated brand spending (expending nearly 12% of sales toward marketing in each of the past two years, 130 basis points above the level directed in 2017-19).