Third Bridge 专家访谈称美国口腔护理市场延续高端化与渠道碎片化趋势

[[00:01:58]]
Could you walk us through some of the high-level trends and dynamics currently shaping the US oral care market?

[[00:02:16]]
I would say there are four overall dynamics, but we can go deeper into any of them, if you like. The first is a sharp move towards what we call, I would call, benefit-led premiumisation. Benefits such as whitening, sensitivity, gum health, enamel repair, experiential benefits in terms of how the toothpaste tastes or works in your mouth. Ultimately, dollars are shifting very quickly from what I would call core basic toothpaste into these benefit-led areas. For example, whitening alone is now, I don't know, more than one-third of the global toothpaste market and much more of the growth of the category overall. I think the last thing I would say is that the category has and continues to shift from basic hygiene, which it rested on for decades to now overall health and aesthetics. That's probably the first one and then the most important one. Specific to the US, the second one I would say would be continued channel fragmentation.

The growth of club, Costco specifically, but also Sam's and BJ's, e-commerce or pure play, so Amazon, very specifically as the fastest-growing retail platform within, and then even direct-to-consumer through TikTok Shop and things of that. The third would be what I would call value bifurcation. The K-shaped economy that you've heard about, and I know that all of the players in the category have talked about. You've got like premium benefit-led whitening, therapeutic growing at the top and then private label and value at the bottom and the middle of the category getting squeezed quite a bit as consumers spend at either end of the category. Then the last one would be ingredient changes and ingredient disruption. In Europe, I know it's a topic because of the MAGA movement here or MAHA movement, excuse me, here in the US, alternative versions of ingredients for Oral Care are being considered more and more and there is a little bit of floating concern out there regarding fluoride and specifically the health risk associated with children with fluorosis or an overuse of fluoride.

That hasn't moved that far in the US, but it continues to bubble. Hydroxyapatite and other alternatives to fluoride will continue to be something that bubbles and may pop through. Certainly, microbiome, which has been in food and supplements is also starting to get a lot of attention within Oral Care. I would expect to be some movement there across the category. That's also where all the challengers are going to continue to attack the players, Haleon, P&G, Colgate-Palmolive, so those guys like Boka, Hismile, etc. Those would be the four that I would say are the biggest trends shaping the category and continue to shape the category going forward.

[[00:06:11]]
You said whitening makes up about one-third of the category. Is that presumably in the US? The US is obviously a more mature market. If you combine all the other benefits, are we getting close to 50% of the market? How much runway might be left in this shift?

[[00:06:42]]
No, I think actually, when you combine all of the benefits, it's probably north of half the market now.

[[00:06:57]]
Is the growth driven by benefit-oriented products skewed toward a particular channel? I think you called out club stores as seeing growth. I was perhaps a bit surprised to see that club stores might be driving all that premiumisation.

[[00:07:10]]
Club is driving dollar per trip spend on a per ounce or per gram, it's driving significant dilution in price. The category is growing in three main channels, actually maybe four channels. One is club, two is pure-play Amazon. Three is mass, Walmart, and secondarily, Target. Target has had some up and down years, but there and then in Dollar. That matches also what you see in the behaviour in terms of the top of the category selling and the bottom of the category selling. Where it's shrinking is in grocery and the drug trade here in the US, which both continue to struggle to figure out how to compete with those other growing channels.

[[00:08:08]]
To that point about growth at the top and the bottom, I think you mentioned that private label is where we are seeing some growth. If I go back a few years, I don't think we would have expected or associated oral care with high private label penetration. Do you think private label in oral care is here to stay now?

[[00:08:31]]
It certainly is continuing to grow. It runs at a much lower rate than other categories when it comes to private label. What you see is when you look at the subcategory, you see some different dynamics. Within standard or core or basic toothpaste, private label actually, you would expect it to be strong there. It's actually not very strong. That's because between P&G and Colgate-Palmolive, they are very effectively covering the lower price point through base formulas as well as very intense promotional activity. There's not a lot of space, in fact, for private label to get a foothold. Where private label is very effective right now in the category is actually in the sensitivity area. That's where Haleon with Sensodyne has been very strong, and they run a very different strategy. A much higher price per gram approach and very limited promotional activity. That has actually given space for private label to fill in at the value tier.

I think we're going to continue to see private label actually play in the benefit-led parts of the category where Colgate, P&G and Haleon don't want to be diluting their price through lots of promotion. That's, in fact, where we're going to see private label continue to expand and succeed, not within the core part of the portfolio, which is highly price and promo driven.

[[00:10:04]]
Given all the dynamics you've outlined, does anything look particularly different if you fast-forward 3-5 years from now, or is it pretty much an extrapolation of the same trends you've discussed?

[[00:10:18]]
I think it's going to be an extrapolation of the same trends. The innovation cycle in the category is slow. Given the government regulation of the ingredients and those being drugs and having to be approved by the FDA, things don't move as quickly. It's going to be a more steady push forward where premium tiers continue to grow behind the aesthetics or behind whitening and therapeutics. I do expect that we'll continue to see innovation in the therapeutic category, and maybe we'll start to see some oral microbiome coming. That may not arrive in the next three years. That's probably post three years. I think that's going to be on the agenda for the category. You're also going to see more connection, I think, to the systemic health benefits of Oral Care, so cardiovascular disease, diabetes narratives, lung health. There's all kinds of connections, which the industry, I think, still hasn't figured out how to talk to and market around, but those are there. I think that one of the biggest things that I see that is going to be growing the category is around what we call the category calls regimen selling.

Paste plus rinse plus toothbrushes. Even you can connect that into whitening, so strips or other whitening as full regimens, much like you see in skin care for overall Oral Care. That, I think, is what's going to happen. I think we're also going to see a continued rationalisation. The category got very fragmented, continued to grow space. SKUs are 350-500 SKUs in a typical Walmart store, and it's a little bit of an overwhelming shopping experience. What we're going to see is, especially as price pressure and efficiency pressure continues to hit retailers, we're going to see a reduction in the number of SKUs. You're going to have a smaller, but I think more productive shelf as we go forward.

[[00:12:27]]
To clarify, it seems you're suggesting that there is still headroom for premiumisation and that should lead dollar value growth over the next few years even in a mature market such as the US?

[[00:12:39]]
Absolutely. I think that's the only path towards growth. Scratch that. There's premiumisation and regimen building are the two paths for growth. You have virtually 100% penetration of toothpaste and toothbrushes, to a lesser extent, rinses. The average American brushes his or her teeth 1.5 times a day, sadly. That is a very hard behaviour to shift. I have no expectation that that's going to shift. The way that the industry is going to grow this category is through premiumisation and more items in your bathroom in the regimen.

[[00:13:22]]
With Q1 2026, Colgate lowered its gross margin guidance, and the market has moved on a bit since then. Do you see a risk of incremental cost pressures above current guidance that could further impact gross margins over the next 12 months or so?

[[00:13:50]]
Yes. It's hard to predict and see what else will occur. I would say, it obviously continues to be an unpredictable world where we live in. Colgate has a very global supply chain. As they've announced in their guidance going forward, they're quite a bit exposed to raw materials and logistics, specifically logistics. As those types of ingredients become more and more difficult to obtain and the cost of shipping and the timing of shipping increases, they're definitely more exposed than some of their competition in that area. Now that's because they're also extraordinarily efficient in terms of how they've organised their manufacturing globally, but they require a low-friction international trade system for that to continue to be a competitive advantage.

[[00:14:54]]
How does Colgate think about passing some of the cost pressures on to the consumer? Coming back to your K-shaped analogy, is it a matter of being able to pass those costs on at the premium, higher end of the portfolio while taking a hit at mass-market price points?

[[00:15:14]]
I think as Noel has said, I think, multiple times in analyst calls and at CAGNY and other places is, they're best-in-class at funding the growth in terms of finding cost efficiencies to offset increased costs. It's a core competency of the company, and I would only expect that they'd be continue to flex that muscle. However, with the rate of inflation and cost increases coming, historically, they have not been able to run a cost savings programme that could match this level. There's going to be a need to offset that with price increases or at least a mix shift up to the higher-value, higher-margin items within the portfolio. I would say the category struggled with this overall in the last five years, and it's only going to get more challenging to be pushing price increases through retail. There's a lot of pushback from certainly Walmart and other retailers on that, a lot of, I don't know, pricing elasticity fatigue for lack of a better way to describe it. The companies that are going to be most successful are going to be the ones that are not just lifting price overall, but shifting the mix to the higher profitable parts of the portfolio.

This is where maybe RGM and sophistication in RGM is going to separate winners from losers. Historically, Procter & Gamble has been by far best-in-class in the industry at running the most effective price-packaging architecture, figuring out the promo strategies by channel that have been the most efficient and effective. That's an area that Colgate-Palmolive, if they're going to succeed is going to need to really improve their capabilities in. Globally, I would say Colgate-Palmolive is a leader in RGM. In the US, Procter & Gamble has demonstrated itself as the best-in-class in that area. It's going to be an area of focus for them.

[[00:17:34]]
In today's environment, we hear a lot more about RGM [revenue growth management]. Given that it's something you currently advise on, what do you think has made P&G [Procter & Gamble] in the US so successful with RGM, and where would you rate Colgate right now in terms of closing that gap?

[[00:17:52]]
What P&G has been able to do is across the toolkit of RGM, they've been extraordinarily successful. That's with making sure they have the right opening pack sizes and price points. They have differentiated pack alternatives across channels. They limit the amount of channel conflict, meaning the same product being sold at different prices across channels, which often can create a race to the bottom on pricing. They're able to offer different sizes at different price points and manage the change that can be very expensive to be changing pack sizes and things of that sort. They have expertise in category management and strong relationships and category captaincy at big retailers that has been a key driver of their sustained success in that. Colgate-Palmolive is going to need to make some significant investments to catch up on category captaincy and category management.

I think Colgate-Palmolive has all the tools and the expertise internally, leveraging AI now, I think, very effectively to be much more efficient in terms of knowing which price promotions to run that deliver the highest return on investment and the highest profitability, but they're still lagging in how they manage their portfolio as effectively as possible. I do think a focus of management attention on that and being able to pull all these levers of RGM is an area of catch-up that they will have vs Procter & Gamble going forward.

[[00:19:36]]
As you alluded to, RGM does require investment. At the end of the day, if done correctly, shouldn't it be margin-enhancing while also setting the portfolio up better for growth and market share?

[[00:19:51]]
Absolutely. If you look, I think, across the industry, the amount invested in gross-to-net or price investment vs marketing investment is within the category 2:1 on pricing investment vs marketing investment. There is a lot of efficiency and P&L opportunity to be gained across the category and certainly for Colgate-Palmolive if they're able to improve their capabilities there.

[[00:20:26]]
Colgate lost some market share in the US in Q1 2026, I believe, but that seems to have stabilised. Given all the cost and margin dynamics and playing catch-up on RGM, is there any reason the company shouldn't at least be able to hold market share over the course of this year?

[[00:20:55]]
Without having the benefit of understanding the investment posture of Procter & Gamble and Haleon, I would say there's no reason why they shouldn't be able to maintain it. That said, both those companies have demonstrated in the past a willingness to invest at high levels when they see opportunities. Whether it's within the whitening part of the portfolio for Procter & Gamble, whether it's with innovation, Haleon has actually innovated very effectively, both in beyond sensitivity into gum health and whitening Haleon. If they decide to ratchet up investment, Colgate-Palmolive may not have the P&L flexibility based on everything that they've just announced in terms of cost issues and headwinds to keep up. I would say outside of a competitive activity, I wouldn't expect the market share situation to change. It is a very stable market share category. If you go back and you look over time, it's been very stable. It's only when there's been a disruption of innovation or investment by one of the competitors that things have changed meaningfully.

[[00:22:10]]
Would you generally say the category is quite price rational? You referenced that there's quite a lot of promotional activity at the mass-market level. Is that promotional activity restricted to those mass-market price points, with the upper end of the market remaining a bit more rational? Is that the right way to think about it?

[[00:22:30]]
Yes, that's the right way to think about it. Promotional activity at the upper end is driven around trial and moving the value-add innovation forward, but it is limited there. Then it's more intense at the mid-tier and the bottom tier where there's a fight for volume. When one or two of the competitors start to fight harder in specifically some of the channels that are struggling, that's where you get to a slightly irrational level of price promotion as the companies are defending volume. For the most part, it's highly rational.

[[00:23:09]]
Regarding Colgate's 2030 strategy, could you help us understand what management means when it speaks about keeping categories and brands at the centre as a key component of that strategy?

[[00:23:33]]
I think from a high level, I can explain that without discussing anything specific to strategy and what they anticipate. What I can say when it comes to categories and brands is shifting a maybe historical focus on specific product and/or geographic initiatives to a global view of the category and where the company wants to grow. Identifying initiatives where we say, you know what, benefit-led growth, for example, is going to be the focus. Whitening, therapeutics, whatever it may be, being a focus of how do we grow these categories globally and then how do we bring them to life within each of the geographies. There's going to continue to be a heavy focus on a global category growth approach. You've seen, I think, some announcements recently coming out of there about the elevation of the head of what was called Enterprise Oral Care to be the CMO of the company. I think that's a continuation of that approach to centralise and globalise the category growth strategy and then deploy that regionally through the divisions. Then the second thing is continuing to follow a needs-based brand strategy.

Where each brand zooms in on a specific consumer need, both an emotional and a functional need and then continues to build out based on that. I think an example, historically, which is a good example to look at, is Colgate Total, which was repositioned and relaunched with a new packaging, new formulation, new advertising globally a couple of years ago. Then building out from just a toothpaste brand to a toothpaste plus a rinse plus a toothbrush brand and building out against those consumer benefits with a brand-led strategy. Focusing in on the big sub-brands within the company. They'll continue to do that, and then they'll work on, I think, premiumisation within that. Optic White in the US, Colgate Total, Hello brand as a flanker brand, we can talk a bit about that in a little while. That's where they're going to be focusing on a brand-led approach.

[[00:26:16]]
Another component of the 2030 strategy is what Colgate terms omnichannel demand generation. Could you paint a picture for us of what the company means by that, and in which particular channels it might need to up its game?

[[00:26:36]]
Noel mentioned it at a recent event where omnichannel demand generation, I think he called it a behaviour change for the company. I think that's a very fair assessment from where I sit on that, which is looking at how do we grow not just within Walmart bricks-and-mortar stores or Target bricks-and-mortar stores, but across the full retail omnichannel landscape. Walmart has been a driver in the category overall and wanting to push the percentage of their business to be much more what they would call omni vs bricks-and-mortar. Same thing with Club and Costco and then obviously, what we discussed before in terms of the growth of pure play or Amazon. Colgate-Palmolive, if you look at the share in those areas, has been a laggard in the pure-play area and the omni area overall compared to certainly the upstarts within the category and P&G, which has really been of the largest multinationals by far the leader in building the omnichannel business.

It's going to be a larger behavioural change and something that the company is going to have to focus on to be able to catch up. The good news for them is that unlike, say, P&G, I think there's a lot more headroom in omnichannel for Colgate-Palmolive because they've been a little bit underdeveloped. It provides an opportunity for them to grow at a faster rate if they're able to unlock it. I would say like a brand like Hello, which is a social-native business, I think, continues to have a massive growth trajectory within that area.

[[00:28:26]]
Regarding R&D and scientific innovation, how do you think Colgate stacks up against its key competitors, particularly P&G, in oral care, whether we focus on the US or look at it globally?

[[00:28:46]]
Colgate-Palmolive has always communicated and touted its R&D expertise, which from where I sit is best-in-class in the industry with R&D centres in the US as well as elsewhere around the world. They bring a tremendous amount of capability. They lead the industry by a significant way in terms of the number of patents within Oral Care, everything from chemistry patents to toothbrush and other kinds of engineering patents. It's an area of continued massive investment and lead. The issue that I think the market has shown is that while Colgate really leads in this area, Procter & Gamble has had a lot more success in commercialising their science into dominant and winning formats. The best example is probably whitening in the US, both in toothpaste and in whitening at-home whitening. Whitestrips which is, I don't know, 25-30 years old now these days, dominates that category, the at-home whitening category.

While Colgate-Palmolive has introduced new novel formats, so specifically the pen and the LED whitening kit, they've struggled to crack into that space. P&G continues to commercialise and be much more effective in that area. I think on the flip side, with Haleon being… Sensitivity and gum health now being their primary focus and then their dental professional marketing machine, they've really created a moat for them as well. While it's a little bit ironic. While Colgate-Palmolive dominates and leads in technology and R&D capability, they've been outflanked a little bit by P&G and Haleon due to their marketing capabilities is how I would describe it.

[[00:31:05]]
Presumably, the upstart brands don't have anything similar to the R&D capabilities of the bigger players, but their success has been driven more by route-to-market strategies or having a proposition that's more on-trend with consumers. Is that the right way to think about it?

[[00:31:20]]
Exactly right. It's much more about having a proposition that is on trend and slightly less constrained, I would say, by governmental regulation. They're higher risk taking and then using the modern marketing tools of social-first and digital commerce, where Colgate is continuing to catch up.

[[00:31:49]]
Do you think Colgate should take more risk or is it really just straitjacketed because of the regulation? Do you think there is an opportunity to culturally become less risky?

[[00:32:05]]
For the company overall, I think there is an opportunity. Overall, the Oral Care industry in the US it's a fluoride delivery business. If anything were to happen and the regulatory environment changed around fluoride, there would be a massive disruption in the business. I think there is an opportunity for Colgate-Palmolive to start taking some more risk and building out Oral Care solutions that aren't 100% tied to the future of fluoride.

[[00:32:49]]
Is there any innovation in the industry that you have been particularly impressed with recently?

[[00:32:57]]
In terms of product form, there hasn't been anything that has been really, really impressive. If you look at from a marketing perspective, I think in the last two years, what Colgate-Palmolive has done with the Hello brand has been best-in-class in terms of how you build a modern brand that is designed around what's trending around a younger consumer and about leveraging the modern marketing tools. It's not only a flanker for the business in terms of its ability to cover off on different demand spaces where the Colgate brand can't reach, but it's also, and I think more importantly, a little bit of a pioneer in terms of an experimental lab within the company on how to modernise their marketing skill set and toolkit. That's one piece. Where else in the market that's probably the most impressive is what Church & Dwight has done with TheraBreath. Acquiring that brand, which was built on a marketing platform of doctor-formulated or dentist-formulated and dentist-approved, they've done a tremendous job expanding distribution on that, expanding the portfolio and continuing to run that marketing model extraordinarily effectively.

Not only it's the fastest-growing, most successful brand in Oral Care over the course of the last three-plus years. I would expect that there is a lot of potential in that brand to now move out of rinses and they have a fledgling toothpaste proposition. You can imagine if done effectively, that brand has a lot of potential to expand to the other parts of the category and be a very successful business.

[[00:35:05]]
You alluded to how there is scope for Colgate to close some of that gap vs P&G in RGM. Can you help us understand what AI can bring to RGM and what benefits that could have, either for the industry as a whole or specifically for Colgate?

[[00:35:34]]
One of the biggest challenges with RGM is modelling out all of the potential outcomes. Companies like Colgate, but other multinational large CPG companies have struggled often with making significant changes in their promotional approach and their pack architecture in ways where those changes often come with lots of risk. Companies are rightfully conservative in the changes. Specifically, whenever in a highly promoted category, if you look at the lower end of the Oral Care category, where it's volume on deal represents significantly more than 50% of all toothpaste sold, there's a lot of risk in terms of pack changes and promotional changes. What I think the AI will do is allow them to run lots more scenarios that are much more effective in terms of predictive and looking at specific promotional events. Which retailer, what tools within the dynamic, you have price-off at shelf, you have digital coupons, you have other loyalty programmes. Figuring out what's the specific algorithm of that, that becomes the most effective and most cost-efficient vs subsidising volume.

There remains and continues to be a massive amount of subsidised volume within the category. There are historical events where promotions are highly, highly, not only profit negative, but really revenue dilutive in terms of how they've worked. This is where AI, I think, can provide a level of analytics and predictive analytics that the industry has never had before and certainly Colgate hasn't had before.

[[00:37:54]]
What really resonates with consumers about the Colgate brand, and how does that compare to Crest?

[[00:38:13]]
Colgate is one of the oldest consumer brands in the world, and it's the most penetrated brand globally. Not specific to the US, but the history and the ubiquity of the brand is core to its strength. In the US, it's trust, science and that ubiquity or universality is what is the core of the brand. You can see that within the dental industry as well. That said, there isn't a strong differentiator or USP vs, say, Crest. That global scale or the universality of that, that's not a meaningful difference. The one area that the company has continued to try to push is on clinical credibility. Probably the two examples in quote unquote recent history, the Colgate Total, which was launched in the US back in 1997 was a major point of differentiation and something that changed how people view the brand and then Optic White, all behind clinical ingredient credibility. That said, there has not been a lot in the last 30 years, if I'm giving you an example of 1997, that's not a good sign. The real vulnerability is that trust is a default or boring to certainly the younger consumers. They're discovering brands on social and other ways.

The Optic White being a brand for aesthetics is one. I think the way that they're bringing that brand to life with recent packaging changes and more digital communication, that's helping. Like I said with before, Hello as a brand. Overall, the Colgate brand, it trades on its trust science and universality been around forever. That's also, unfortunately, its biggest weakness. It's a double-edged sword.

[[00:40:42]]
Are you saying that's pretty similar to Crest? Do they attract very similar consumer demographics or consumer profiles?

[[00:40:52]]
Overall, I think the one area of difference between the two would be the Hispanic profile of Colgate-Palmolive, and that has a lot to do with the strength of Colgate-Palmolive in Latin America, and that has bled across the border in the southern part of the country. Overall, people bring in their knowledge of Colgate. In Latin America, Colgate is the generic name for toothpaste. Toothpaste is called Colgate in large areas of Latin America. That's one strength. Then also overall, the lower-income part of the US demographic index is higher on Colgate. Then otherwise, they are very, very similar and the point of differentiation between Colgate and Crest is very both trusted. I would say where Crest has the advantage is certainly in whitening and its association, what they've done with Whitestrips has really given them a stronger association with aesthetics and whitening. That would be the biggest advantage they have over Colgate.

[[00:42:00]]
Is that where you think the strategy behind the two differs most? Beyond the natural advantage Crest has built for itself in whitening, what other strategic differences might there be?

[[00:42:15]]
I think the other difference is how P&G covers the entire category. A huge business in rinses, both the Scope brand as well as the Crest brand playing within rinses. Colgate's market share within that area is much smaller and the brands they play with are much more limited. Then within power toothbrushes. P&G plays at parity with Colgate, a little bit less in manual toothbrushes, but that's not where the future growth is. It's certainly in the electric toothbrush category. There with Oral-B is the biggest point of differentiation and advantage. P&G is not only category captain within toothpaste, but is a captain across the entire category. All those higher-value parts of the category is where P&G has its biggest strength. Value-added in toothpaste with the Whitening brand, value-added in Oral-B in toothpaste and then also in rinses.

[[00:43:26]]
Are there any differences between Colgate and P&G and how they might work with the dental trade to endorse products?

[[00:43:36]]
Colgate has a separate business, Colgate Oral Pharmaceuticals, which sells directly to the dental trade. It's a business that they've had for a number of years and provides a significant channel for influence and endorsement and so they do dental office sampling, so when you come out after your cleaning or any kind of treatment, you get a toothbrush, toothpaste. Equally as importantly, they have fluoride treatments and other products that are sold to dentists for treatment in-office, and they have dabbled in in-office whitening as well. All of that provides a significant opportunity to drive professional recommendation. That said, they have historically been out-executed by Haleon in terms of what Haleon has done in terms of dentist-recommended. What the difference there between what Haleon and Colgate-Palmolive have done is Haleon has created a whole marketing model leveraging the dentist. Not only is Sensodyne dentist-recommended, they have dentists in all of their advertising, and they spend a tremendous amount, significantly more than anybody else in the industry on dental detailing is the terminology.

People going to dental offices and massively sampling Sensodyne products and educating dentists and hygienists on the benefits of their brands. That has been a huge differentiator for Haleon and something that while Colgate-Palmolive has the connection there has not leveraged nearly as effectively.

[[00:45:31]]
Do you think that's in part due to the nature of Haleon's sensitive teeth category, or is it more than just playing to category strengths – a truly proactive strategy to work with the dental trade to secure endorsements?

[[00:45:51]]
It certainly is helpful that sensitive teeth is a very common issue and people go to the dentist and they want a recommendation from the dentist. That is one primary reason. They have really built a full strategy around that and a massive investment. The amount of investment they have in detailing and then advertising. Also then they pay that off in retail where they're not doing deep discounting. We talked a little bit about where private label has gotten a little bit of a foothold on the sensitivity side. Haleon promotes at a fraction of the rate that P&G and Colgate-Palmolive do. What they do is they take that savings from not promoting and they invest that in the dental and the dental detailing and the advertising. It's a totally different business model.

[[00:46:44]]
Could you talk about some of the more interesting growth opportunities you see for Colgate in the US? Could you also touch on the Hello brand?

[[00:47:07]]
I think the growth opportunities continue to be numerous. The good news for Colgate-Palmolive is there are a lot of vectors which they can pursue. The challenge is going to be where are they going to focus investment, especially in the next couple of years where the cost headwinds are going to be significant. There continues to be lots of headroom for growth in whitening. Like I said, they have a fraction of the at-home whitening market, and there continues to be new product forms that can be imagined and sold in that space. Colgate-Palmolive has started with their pens and their LED kits. While they haven't achieved the scale that Whitestrips has, I think with continued refinement and marketing support, there is opportunity within those platforms as well as new platforms that the company can invent. The second would be within gum health and overall, in Europe, there are some very significant gum health businesses across the continent that I'm sure you're aware of. There's a Periogard brand, which is up in Canada.

That brand in that area is an opportunity for Colgate-Palmolive to get into and should be highly incremental to their portfolio. There are going to be significant costs associated to that as Haleon with Parodontax and with Sensodyne will probably defend that turf very strongly. It's a high-cost model that the company has to determine whether or not they want to go after that, but there is lots of opportunity there. Certainly, oral microbiome, where the overall industry, I know, is investing in understanding and how to apply that. That can be an area that plays into Colgate's clinical credibility and where their brand is the strongest in terms of science, and they may be even able to leverage that science and move the needle of the regulatory environment here. That could be a big opportunity for them. I think there continues to be in the rinse category as what we've seen with TheraBreath, there's more therapeutic opportunities in that area. Colgate and others have played around on the cosmetic side of that.

I don't think there's a future in cosmetics just because of the chemistry associated with that. On the therapeutic side, there's lots of opportunity to go there. Then continuing to innovate around new ingredients. Hello plays and so does Tom's to some extent, in fluoride-free, continuing to look at non-fluoride solutions and other natural and organoleptic experiences.

[[00:50:21]]
Why do you think Colgate can't compete effectively with Crest in whitening? Is it just a matter of how it chooses to allocate resources – if it really gave it a strong push, do you think Colgate could compete and close or narrow that gap?

[[00:50:39]]
It's all about management choice on investment. They have all of the technology and capability to do it. They have the retail strength if they want to leverage it. P&G has a dominant position. They have a dominant position in terms of revenue and market share. They have a dominant position in terms of mind share, given their 30 years of history in it. They have a dominant position in spend, and they have a dominant position in category management and the shelf. That creates a very effective moat for them. However, there's nothing preventing Colgate-Palmolive from deciding that that's going to be an area that they want to win in and then investing behind it. It's just going to require different trade-offs strategically and financially.

[[00:51:31]]
You talked about the benefit of P&G having that full oral care portfolio. Again, it comes down to resource allocation, but would electric toothbrushes be the only area where Colgate perhaps couldn't compete with P&G?

[[00:51:49]]
I don't think there's a technology challenge for them to decide to compete there. They attempted with Hum in the US a few years ago. That was not successful. You can make a lot of arguments for why. One of it was the level of investment. Another one was maybe the quality or the technology within the product itself. If Colgate wanted to make a play there, whether it's an acquisition to get into that market or to invest, they could as well. It comes down to the cost to do it. Perhaps the easiest more effective way is to make an acquisition to get into that space vs building it organically.

[[00:52:35]]
Is sensitive something that Colgate should look to get into or is it better just to leave that to Haleon?

[[00:52:48]]
Colgate has a brand called Sensitive and it also has a sensitive variants within the Colgate Total portfolio. In totality, that's a fraction. That's probably one-tenth, if not less, of the market share of Haleon in that area. Again, it's just like electric toothbrush, it's an expensive category to win in and same thing with Whitestrips. I don't think Colgate-Palmolive can compete in multiple of those at the same time, and that's probably been one of their limitations with attempting to compete in whitening, attempting to compete in sensitive and investing in flanker brands like Hello. They've been spreading the toothpaste, the peanut butter, very thin across the bread, as we like to say. It can win in any one of these areas, but it's going to be probably cost prohibitive to win in multiple ones. That's the choice the company needs to make.

[[00:53:59]]
Are there any left-field competitive threats that we've not discussed out there that could come into play and attack a core business of Colgate within US Oral Care?

[[00:54:18]]
I think the category in the US is very settled. The opportunities are TheraBreath, if they can make a play into toothpaste, that could be a threat. You have Hismile, which is very strong in places like Australia. The regulatory environment is more challenging here for them in the US. I think there's a lot of barriers in the US that are preventing other upstarts from taking more than 3-5% market share. Now that's not insignificant in the scheme of things, but not a massive threat. I think the biggest threat is if one of the fluoride alternative businesses, if they're able to, so hydroxyapatite or something like that, if that is able to be proven to be an alternative and effective alternative to fluoride and there continues to be concerns about fluorosis and the risk of fluoride poisoning or overdosage of fluoride, that is probably, to me, the biggest threat. However, that seems low probability at this point.

[[00:55:42]]
Super stuff. We should wrap things up and let you go. Thank you very much indeed for spending that time with us. It has been incredibly informative and very helpful for us indeed.

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