Colgate-Palmolive Co. (NYSE:CL)
Barclay's Americas Select Franchise Conference
May 22, 2013 3:15 am ET
Noel R. Wallace - President of Colgate North America & Global Sustainability
Delia H. Thompson - Senior Vice President of Investor Relations
Good morning, everyone. I'm Peter Smith from our New York-based Institutional Corporate Marketing team. It is my privilege and pleasure here this morning to be pinch hitting for Lauren Lieberman, who is our coverage analyst on the Colgate-Palmolive Company. With us today from Colgate-Palmolive, we have Mr. Noel Wallace, who is President of North America and Global Sustainability; and Bina Thompson, who heads up the company's Investor Relations program.
With its selectively dominant market shares, significant emerging markets' exposure and relative price-inelastic product portfolio, Colgate has historically exemplified the hallmarks of a high-quality, defensive growth name. Now with the announcement of a 4-year restructuring program, resultant savings will be available to fund growth initiatives and should enable an acceleration in earnings growth. Here to tell us the Colgate story, let me please ask Noel Wallace to come up and spend some time with us. Noel?
Noel R. Wallace
Thank you, Peter. Good morning. I'm actually delighted to be here. I appreciate the invitation for myself. And Bina Thompson, who is in charge of our Investor Relations, is also with me today. I've been with the company for 26 years now, spanned the globe in most of my assignments. I started off in New York and then had assignments in South Africa, Turkey, Puerto Rico, Uruguay, Poland. And I -- before coming to the North America job, I ran our business in Mexico, which is our largest subsidiary outside of the U.S.
What I'll do today is take you through a little span of our global business, but then very quickly get into our North America strategies, which are very consistent with our global strategies. So please feel free to ask questions at any time you'd like. I can, quite frankly, span the globe in terms of experience and knowledge relative to Colgate-Palmolive. And I'm certainly privy to the strategies that we have in place all around the world and, by and large, most of the results that we have in our geographical divisions. And if I can't answer anything, certainly, Bina Thompson can jump in and help out.
Okay. A quick update on our global -- you saw our results in the first quarter, 6% organic growth on the top line, very well spread globally and driven by improved pricing, which continues to be a focus for our team; gains in gross profit across most divisions, likewise and importantly driving the advertising line, which inherently is driving our consumption; and top line growth in operating profit across most divisions. If you scan down the P&L, you see sales up 2.5% versus the comparison last year, up 5%; foreign exchange down 3% in Q1; volume up nicely at 4.5%; organic growth up 6%, very positive organic growth; gross profit up 40 basis points; profits up to shy of 4%; and EPS up 6.5%. And those were our official Q1 results, largely driven by our continued growth on the consumption standpoint. Globally, these are our worldwide oral care shares. This includes toothpaste, toothbrushes and mouthwash. Our mouthwash business, globally in those categories which we complete, you see our share up at 37.4%, continuing to progress very nicely, obviously driven by the strategies that we have in place and the strong innovation pipeline that we've had over the last 5 years.
A new chart relative to the strength of the Colgate name, certainly, you can see that inherent in the consumption numbers and the shares, somewhat of a busy chart. But this shows you not only the strength of the Colgate brand globally from an awareness standpoint, but more importantly, the penetration of the brand. This a survey from Kantar, Kantar marketing globally, that shows you next to Coca-Cola, that Colgate is the highest-penetration brand globally relative to household penetration. Again, that's driven by the strength of the Colgate brand and the consistency of our strategies globally and the consistency of our innovation process. So we're very pleased to see the continued elevation of our Colgate brand.
Okay. Quickly diving into North America. I'll take you through our 2012 results but, more importantly, get into the strategies that we have across North America, which, as I mentioned upfront, are very consistent with the strategies that we engage and implement on a global basis. 2012 results, as you know, was a tough year for -- critically for the developing -- for the developed world, weak economic growth, driven by, quite frankly, stubbornly high unemployment in the U.S. That has slowed category growth not only North America but similarly seen here in Europe. Category growth, historically, in the U.S. was growing at about 3.5%. Right now, in aggregate, in the categories in which we compete, it's growing around 2%; continue to rise commodity prices in 2012, very promotion-oriented consumer, but certainly, a consumer that is receptive to a high innovation -- or high-priced innovation which you'll see as we get into some of our results; and certainly a lot more increased competitive activity particularly in our priority category, oral care. Despite those, North America continue to deliver very strong results, driven by positive pricing and volume. You see that in our sales growth analysis. Sales were up 3.3%, well balanced between pricing and volume there, volume up 1.8%, pricing up 1.6%.
As you know, within Colgate, we are very focused on the gross margin line, very culturally. We spend a tremendous amount of time across all areas of the organization talking about our Funding the Growth savings, which is the primary catalyst to our gross margin expansion. You can see our Funding the Growth across North America and acceleration of the savings, which is just shy of $130 million in 2012.
SKU simplification, an area that perhaps is not nearly as sexy as Funding the Growth but a very important part in terms of driving efficiency within our organizations. SKUs are our stock keeping units with a number of actual products that we sell to the trade. You can see an interesting chart here in terms of how efficient we've become and the focus that we have in this area. Our net sales per SKU was up 14.7%, obviously driven by stronger top line growth but, more importantly, taking the SKUs down that we sell to the trade. This allows us to be far, far more efficient in our manufacturing and customer service and logistics strategies. And certainly from a trade standpoint, it simplifies our portfolio at the shelf.
Obviously, all those efficiency drivers between Funding the Growth and the efficiency drivers we have within the SKU simplification initiatives allows us to increase our advertising support. Ultimately, that's the barometer of success for us in terms of our ability to drive consumption, drive our market shares. You see in 2012, across North America and the highly competitive category that we were up or flat in 8 of the 10 categories in which we compete, so terrific results from that standpoint. This is an aggregate consumption numbers in all the categories in which we compete across North America. Our consumption was up 4.2%. And the categories, as I mentioned earlier, were up 1.7%, so basically growing at double the category pace in North America, moving to the balance of the P&L down the profits that generated an increase in profits of about 5% across the calendar year 2012, so terrific results from that standpoint.
Okay. Now walking through the strategies for 2013, which, as I mentioned earlier, are consistent with how we're engaging our strategies on a global basis. The good news across North America, really strong momentum. You saw the results that we just issued in the first quarter, a very strong quarter for North America, sales up 5.5% and operating profits up a handsome 21.5%, obviously driven by the strong leverage that we had at the gross margin line, as well as our continued focus on those efficiency drivers that are lowering our fixed costs.
Let's talk about those strategic initiatives that are serving us on a global basis. They are the following: engaging to build our brands, that's how we go after our consumers, our customers, our profession; innovation for growth, really a whole new look at our innovation strategies that we've implemented over the last decade, quite frankly, how we balance our innovation resources around the world; our effectiveness and efficiency initiatives that really is about our execution on a day-to-day basis and how we take costs out of the system; and ultimately, our last is Leading to Win, and that's building the leadership cadre for the future of the organization.
Let's talk about our enduring emerging capabilities across the globe. First and foremost, it's obviously strength in our innovation pipeline. This is, in a nutshell, our innovation strategy that's driven, obviously, by the insights that we gain from consumers and the understanding that we have from our trade partners on how to drive category growth, bringing in, obviously, a lot of new technologies both internally and externally, making sure that we have the right packaging, the right communication, the right claim structures in order to communicate those. As I mentioned just a moment ago, external innovation is a very important part of Colgate now. We've historically developed a lot internally. We now have a gamut of external partners that we're working with that are bring us new technologies. Particularly in the are of oral care, where we're so strong, we have a lot of external scientists that continue to see -- that bring us new molecules and new information to drive our formulations, which has been terrific. We're focused both on the short term and the long term, which is important from a sustainability standpoint. And obviously, it's a very disciplined and ingrained process that we put in place at Colgate to generate that terrific top line growth that you're seeing, driven by our innovation.
Talk a little bit about oral care. Optic White has, obviously, been a great success for us over the last 2 years. This bundle was originated in the U.S., a highly unique formulation built on hydrogen peroxide. Hydrogen peroxide is the active ingredient that dentists use to whiten your teeth. Historically, we could not get it stable in a toothpaste. It's a very unstable ingredient. We figured out a way to stabilize that in a formulation, and that was really the success behind Optic White in the U.S. And we have not taken that bundle, and we're in 85 countries, as we speak. And we will be in the full 200 countries where we operate, certainly, by the middle of the year; very, very premium-priced bundle, roughly 40% to 50% market average in terms of whitening. You can see we spread that bundle now into the adjacency categories both in toothbrushes and in mouthwash and having just terrific success in both those segments as well.
A new launch that came in the first quarter of this year in the U.S. and, obviously, will continue to expand globally, again premiumizing the Optic White bundle as it is today. It's a new Dual Action formula, which not only has the intrinsic values of the base business, which is whitening below the surface, below the enamel surface, but has another ingredient in it that actually improves the shine of your teeth at the same time, which is very important to consumers looking for the benefit of whitening. That is rolling out as we speak.
Just some interesting benchmarks, I guess, in terms of the uniqueness of the formulation. And these are trial and repeat numbers across the U.S. business for Optic White. You can see the trial continuing to build. So there is more upside for us, as we speak. And importantly, a measure that we look very, very closely at are the repeat numbers on the bundles. So certainly, our consumers are getting the benefit and they're coming back to buy the product. You can see the great repeat rates that we're having. And as a competitive reference, we have our nearest competitor there below. And you see the share in the U.S. continuing to accelerate.
Superpremium is an opportunity for us across North America. Historically, our business is under-indexed in the superpremium area. So we've been very focused on making sure that we continue to elevate benefits and strategies in order to drive our share position in that area. Here's a new toothbrush that's priced at a very high end of the market, which is based on floss tip bristles there in the middle, which is a unique new bristle technology that has a much, much slimmer bristle for better interproximal cleaning. We've taken that concept of slimmer bristles into a full brush of slimmer bristles, a technology that we've actually brought in from Asia, which is a new -- what we call new tapered bristles that's 17x slimmer than your normal bristle. And I encourage you, when it hits the U.K. market, to jump on it. It's a very, very unique technology that has a completely different mouth feel when you put it in your mouth. And if you thought brushing your teeth was boring, it gets quite exciting when you use the -- at least from a Colgate standpoint, it gets exciting. So enjoy it.
Colgate Total is our largest franchise across the world, the #1 toothpaste in the world as a brand, the #1 toothpaste in the U.S., obviously built on the unique, again, triclosan technology. We now have a new technology that we've extended into the high end of the market, which is Zx that offers all of the multi-benefits of Colgate Total plus the added benefit of sensitivity. That rolled out in the third quarter last year.
A big initiative for us not only globally but, more importantly, across North America is the entry into the mouthwash segment. Our mouthwash business globally x the U.S. continues to rise. You see that in the yellow bar. This is an important category for us continue to grow. You can see the -- we're in #1 in both toothpaste and toothbrushes globally. We have yet to be #1 in mouthwash. We are very focused on this category on a global basis, and you can see the success that we're having. We have not competed in the U.S. in the mouthwash business. And I'm happy to report that we will be launching Colgate Total Mouthwash. That has rolled out in the last 2 weeks in the U.S. You can see the category in the U.S. is significant at $1.3 billion, so a lot of dollars to be had assuming that we can achieve our goals. Our current share in the U.S. based on some high-end professional products we didn't compete in the mainstream area of the market is the 2 4. You can see our 2 nearest competitors, quite frankly, have the lion's share of the market, so significant opportunities for Colgate. Therefore, we're launching Colgate Total Mouthwash in the U.S. This bundle will be priced at the very high end of the market. It leverages, obviously, the success of Colgate Total in the U.S. with the technology that we're using globally, which has served us extremely well. This is the bundle. It's based on 12-hour protection even after eating and drinking, so a very therapeutic position and consistent with the Total equity, kills 99% of germs, fights formulation of plaque and gingivitis. Gingivitis, someone did ask me earlier what it was, it is bleeding gums, which is a very prevalent disease around the world. It has no alcohol, which is very much endorsed now by the profession. Colgate Total is the #1 toothpaste recommended in North America and, quite frankly, around the world by dentists. So obviously, by definition, we hope to get significant professional response from this bundle. And it's priced, as I mentioned, superpremium, 123 index to the market average, so very excited about that.
And one of the uniqueness -- unique elements to this launch is how we're bringing it to market and, importantly, how the trade is endorsing it. Obviously, they see this as a significant entry from a very, very strong oral care brand. And what they've done for us, which is very unique for a launch, is not only do we have a great positioning on the mouthwash shelf, but the trade is very focused now on driving regiment. They want to take big mega-brands like Colgate and find ways to drive the adjacency categories, i.e. toothbrush and mouthwash. Mouthwash has a 51% penetration in the U.S. So you can see the opportunities to drive more penetration are quite significant for the trade. And if they can get additional products in their basket, they see this is a great way to stimulate category growth. So as a result of that, they're also putting us on the toothpaste shelf. So next to the #1 toothpaste in the market, which has the highest velocity category within oral care, we will have Colgate Total positioned right next to it, which is a unique advantage for Colgate in the sense that we have a high velocity. So we'll get great awareness of our mouthwash bundle very, very quickly, so very excited about that launch. And so far, in the first 2 weeks, we are shipping to expectations, terrific news.
Talking about regiment. We have used Kelly Ripa in the U.S. She will be endorsing our products. She heads a #1 talk show in the morning, has a very credible reputation around health. And therefore, we will use her to leverage our health care positioning and the regiment claim of improving mouth health in 2 weeks. And that's the combination of using Colgate Total, the toothbrush and the mouthwash. You see the regiment displays there, which are terrific. We will have a significant penetration of those. As we have had that success elsewhere in the world, we will leverage that in the U.S. as well.
Innovating, marketing, communication, just talking a little bit about how that landscape is changing in terms of how we go to market and how we spend particularly our media numbers. And that is around our Total promotional investment. So a lot of what you see on the P&L is obviously focused on the advertising line. But we need to recognize that a lot of what happens in terms of our own building brand awareness happens at the trade level. So our gross to net spending that we spent with the trade is now becoming increasingly important in terms of how we drive brand awareness. So those display activities that you saw earlier, which are great communication devices and in many ways, the ways consumers are first exposed to a brand is all wrapped up in our Total commercial investment strategy.
So let's talk a little bit about I&C and how we're effectively using media. We have a new global planning process. Obviously, the media landscape has changed dramatically over the last 5 years, certainly with digital and how consumers are getting exposed to brands. So we defined that across 3 areas which I'll take you through in more detail: paid, owned and earned. Paid is what we pay for in terms of media. Owned is our own properties, i.e. a Facebook page would be an owned property. And earned is what we would get from things like Twitter or different blog networks that talk about our brands from a digital standpoint, so very complex media environment that we have to manage very carefully. There are certainly a lot of tools out there. We need to ensure that we're spending in tools that drive the best return on investment for us. In implementing a new tool for us in order to harness that complexity is what we're calling a share of engagement tool. So we don't necessarily just measure what is our share of voice in TV, in radio and print, which is traditionally how we measured the effectiveness of our media. We're now measuring how consumers get engaged. And that really is because of how consumers use the digital media and, quite frankly, very differently than they would use the traditional media that we're -- that you've been exposed to in the past. So a quite complex process, but a process that we think really simplifies it in a way that our on-the-ground teams can actively measure the return they're getting from their investment.
I'll talk a little bit more about digital and investing in what works. We doubled our digital investment over the last 2 years. And that is quite significant in the sense that we're finding some of our brands. Quite frankly, the only audience we can get through is through digital. So particularly, those audiences that target 18 to 25 -- the brands that target that 18- to 25-year-olds. Unfortunately, the 18- to 25-year-olds, if any of you have any of them, like I do, they don't watch much TV. It's all on the computer. And we need to make sure that we are adjusting our messaging in our strategies accordingly. And we've done that obviously through our paid, owned and earned strategies that I mentioned earlier, making sure that our Web content educates and, more importantly at the end, engages. It's not necessarily about just simply creating brand awareness. The digital media, you truly have to engage your audiences in a new way if you're going to break through the clutter.
Just an example, we advertised for the first time this year on the Super Bowl. And it was a big decision within Colgate given the pricing associated with the Super Bowl. But it, obviously, is the #1 program on a global basis from a reach standpoint. Just the Super Bowl ad reached 116 million impressions in terms of people it reached through 30 seconds, but we were able to almost double that through the add-in impressions that we have from a digital standpoint. So if you're either using Twitter, YouTube and various other mediums, we're generating additional 51 million impressions. And on the top of that, we continue to generate impressions. So in total, just a 30-second spot on the Super Bowl generated over 350 million impressions. And that's really just simply looking to how use your digital vehicles to create added awareness. And here's the spot that ran on the Super Bowl.
Noel R. Wallace
So a different approach for us but, certainly, one that's very well targeted at those 18- to 25-year-olds we were going after. This ad generated -- was the #6 highest recall brand in a Super Bowl, which is a tough, tough competition. But you can see how then the earlier chart I showed you the engagement that it created during the Super Bowl, people tweeting online their HANDLE IT moments. And so as a result, we created a compounded effect of our strategy, which was terrific for us in terms of the brand.
Our shopper in-store activities. I mentioned a lot of the engagement and awareness that we're building on new brands happens in a store. And we need to make sure that we're balancing our spending from a brand investment on those key vehicles and making sure that our in-store execution is truly flawless. Something that Colgate really prides itself in is how well we execute our strategies. We're very focused on 4 core categories. We have a very simplified strategy. So we spend a lot more of our time ensuring that our execution is absolutely flawless in-store because we can really make a difference at the point-of-sale. Here's a great example. How you take a basic toothpaste and really orient it towards the consumer that's looking for it, which is for more beauty-oriented. And this is a phenomenal display for Colgate Optic White. It really shows you that we've gone beyond the traditional engagement of an in-store endcap to something that truly brings consumers in, in a way that elevates the brand and drives obviously better offtake.
Sharp focus on our critical environments. Obviously, the environment that I'll focus on relative to North America is very mass market-driven. But as you know, we have a significant indirect trade globally. And we spent an inordinate amount of time ensuring our go-to-market strategies and our distribution systems are right. And some of our success that we have, whether it's across Latin America, India or China, is very built on truly understanding how to get our product to shelf from a distribution standpoint. And that's a huge competitive advantage for us globally given the strength that we have in those markets.
Brand equity through consistent messaging and engagement. We have to be very disciplined on how we manage our brands. And we do that, obviously, through very consistent communication vehicles. Here is an example of the regiment launch in the U.S., where we are pushing both toothbrushes and mouthwash on a very consistent basis, and the new regiment launch, I mentioned earlier, behind Colgate Total.
So the other great opportunity that Colgate has as a brand is that we are very consistent around the world and we have the ability to take the Colgate name in any market where we compete across the world and consistently deliver the same message both in a mouthwash or toothbrush and a toothpaste standpoint. That is very unique for Colgate, where our competitors don't have that ability to execute that strategy.
Analytics and pricing, 2 core capabilities I want to talk about because they're areas that we're very focused on and certainly try to sharpen our understanding of that. Analytics is profoundly changing the developed world right now. I mean, the technology that we have at our disposal to drive our businesses at the store level is mind-boggling, quite frankly. We can tell the offtake of our products almost instantaneously now. We can tell who's buying them, who's not buying them and how we want to target those shoppers that we had -- that's core to our media -- our brand strategy. So some of the analytical accomplishment that we're putting in place is, obviously, we want to make analytics a global core competency. And that is -- there is more strategy than words, quite frankly, to that element. We are training our people differently. We are hiring our people differently because we're recognizing that analytics, quite frankly, will be the foundation of some of our brands' successes in the future. We need to make sure that we have the right tools and the right people to do that, ensuring that they're focused. There are a lot of various tools that we can choose from. We need to ensure that they're consistent with our brand strategies. As I mentioned earlier, it's real time now. We can get data very, very quickly and to be able to make decisions on, obviously, an accelerated basis. And we hopefully believe that will drive the competitive advantage for us moving forward.
Market data harmonization. That will be one. Obviously, we leveraged SAP on a global basis. We continue to get great benefits from our SAP integration on a global basis in terms of making sure that we harmonize that data and take quick and fact-based decisions. We're using it to now map -- monitor our brand health particularly as it relates to the image and the attributes of our brands. And obviously, as we launch new products, as I mentioned earlier, we get very, very quick data in terms of the results of that.
Four key areas, marketing mix. We have tools now that really allow us to determine which of our marketing spending elements are the most effective. So is it media? Is it in-store promotions? Is it in-store displays? Is it pricing variations? And that allows us to really focus our spending more accurately. Pricing, as I mentioned earlier, is a key initiative for us globally now. We're really looking at pricing as a way to drive our gross margins. And given the strength that we have particularly in the emerging world, where we have very, very strong shares, we're putting a lot more competency and a lot more technical tools on the ground so our teams can decide how to use pricing as more of a competitive weapon to drive both gross margins and our offtake in store.
Shelf assortment. The trade has become, obviously, increasingly concerned with the proliferation of the categories and the impact that has on the real estate in-store and how they merchandise. So we need to make sure that we have tools to optimize the assortment in shelf. And as I mentioned, the customer data now that we get real time, in many cases, is very important for us to focus on.
Building a culture of pricing discipline. This is something in the last 3 years that the corporation recognized as a huge opportunity for us across the entire world. We obviously had great pricing power in emerging markets given some of our strength in our market shares. But in the developing world, we had been -- developed world, we had not been using pricing, quite frankly, nearly to the advantage that we could. So in the U.S., as you saw, we generated positive pricing last year. And that was very much driven by creating a culture internally both at the marketing and at the sales level to ensure that they understand how to use pricing as a way to drive gross margins and to drive category value for our trade partners.
Lastly, I want to touch on the Global Growth and Efficiency Program that we've recently launched. As you heard, it will generate between $275 million and $325 million of savings through 2016. I thought I'd take you through a couple of components of that, that provides some context to what our focus is. Importantly, these are initiatives that Colgate has, quite frankly, been doing for a long, long time. What we've decided to do now is truly accelerate those initiatives in a way that will bring the savings quicker to the business. So it's a 4-year program to enhance capabilities in the following areas: First is what we call hubbing, and that is how we combine our country operations to strengthen our ability to win on the ground. Let me take you through an example of that. This is our Southern Cone business 10 years ago. We had 4 operations in the Southern Cone in Paraguay, Chile, Uruguay and Argentina, each of those independent subsidiaries with independent full management teams on the ground. What we've done today is combine those into one region called the Southern Cone headquartered out of Buenos Aires, one management team with only commercial resources on the ground. So as you can imagine, we've saved a lot of those resources that would be duplications. But the center of excellence in Buenos Aires, they can bring the analytical prowess. They can bring the strategy. They can bring the innovation and the structure to allow our teams on the ground to focus on the execution perhaps rather than trying to get into the strategic management of the brands, which is a very different way to run the business but a far more efficient and proactive way for us to attack a very similar and common consumer across those 4 markets. Likewise doing that in Central Europe, you can see the 8 markets that we've hubbed just recently in Central Europe based out of Warsaw, Poland. And we're taking that strategy, obviously, around the world now, which is the -- an inherent part of the Global Growth and Efficiency Program.
Second is how do we leverage our SAP systems much more proactively, and that's extending our Colgate business services and streamlining our global operations all around the world. Here is an example in Europe, where we consolidated all of our back office on the financial side into Warsaw, Poland. That allowed us, as you would assume, not only to reduce our costs but, more importantly, when you get that level of transparency, you can start comparing markets on a much more consistent basis and you can find the opportunities much, much quicker as you get common platforms and common databases that allow you to benchmark the country, so terrific, terrific results out of Warsaw. We're now taking that initiative and executing it globally. So each of our regions and divisions will now be looking at back-office announcements over the next 6 to 9 months. That will allow us to streamline our operations on a global basis.
And lastly is optimizing our global supply chain. This has been a journey that we've been on for quite some time. You see pre-2004, 85 plants globally. Today, we have 54. We have announced a further 10% reduction in that footprint. The uniqueness to our model is, obviously, that investment goes back into getting state-of-the-art manufacturing. But the consistency of our bundles worldwide and that SKU simplification initiative I mentioned earlier really afford us the opportunity to continue to drive this. So when you drive efficiencies at the plant level with consistent brands, consistent formulations, consistent SKUs, you can then truly optimize with high-speed equipment that allows us to drive lower costs and reduce our global footprint from a manufacturing standpoint.
So that's the Global Growth and Efficiency Program, and we think that will be the cornerstone of our continued success to accelerate our investment and deliver the expectations that we've set externally from a profit standpoint.
So that's what I have in terms of prepared comments. I'd be more than happy now to take any questions.
Could you touch upon your global market share in toothpaste in the age bracket 18 to 24?
Noel R. Wallace
Oh, we don't break that out in the 18 to 24. Now we have our global bundle called Max Fresh, which I didn't talk about, which is their core target is 18 to 25. And I would be hard-pressed to say that we're not #1 in that age group given the success of that bundle on the globally. As you remember, years back, Closeup used to have a very strong position in that brand. They have since fundamentally exited the U.S., and their Latin America shares is basically negligent now. And that's what is our nearest competitor in that age bracket. And that's an important one. We call those millennials. And the trade is not only focused on the consumer target as are we.
Can you give us an update on Hill's, please?
Noel R. Wallace
Sure. As you know, we saw some slowdown in our Hill's business over the last 2 years. The genesis of that was, obviously, the explosion of the natural segment, which we didn't compete in nearly to the level that we would have liked. We didn't anticipate how that market would change so quickly. We have launched and completely rebalanced our entire line, so to speak, over the last year. We launched a brand called Ideal Balance, which was totally a reformulation that we had issues in terms of taste. Surprisingly, you can do taste testing with animals, and we found that we did have an issue. And we rebalanced that launch, a new line that's very well-positioned against that natural consumer. That shipped at the end of the first quarter in March. We're seeing the pipeline of that happen in the second quarter, and we will see the full benefits from a market share standpoint happen in the back half. The early indications are everything is going as planned. And we're quite pleased with what we've seen so far. That will be a significant issue. On top of that, we relaunched our entire Science Diet line with improved formulations. And importantly, our Prescription Diet line, which, as you all know, is our very high-end line. It's only sold through vets based on specific health care needs of pets -- of your pet. We launched a metabolic range, which is a truly breakthrough formulation, which we're waiting for to come to humans. And that is it allows dogs to use much they want without gaining weight. Obesity is a huge issue with pets. And we developed the technology that allows them to eat, fascinating, as much as they want and without putting on weight. So I'll let you know when we can bring that out in the toothpaste or if something happens that allows us to drive consumption.
I had 2 questions, please. Firstly, on the analytics, I'd be keen to understand a little bit more, just an example, of some of the tools and data sources that you're accessing now that you haven't had before and maybe how some examples of how that's changing the way you do business. And also secondly, Procter & Gamble are throwing out some massive numbers in terms of cost saving targets, et cetera. I'm talking about being more aggressive. I just wondered if you're seeing any impact from any change in behavior from them competitively?
Noel R. Wallace
Sure. Let me take your first question first. One that perhaps is close to you is Dunn Humvee. There are 2 big businesses in the world that use Dunn Humvee data. That is POS data. Tesco has a relationship with Dunn Humvee, as well as the Kroger banner in the U.S., which is the largest grocery chain. They don't consider themselves grocers anymore but more of a mass market chain. The Dunn Humvee data, quite frankly, is probably the best in the industry right now. It allows you to truly segment all of your shoppers on real-time data. So you're able to identify everyone who has been buying Colgate Total and a competitive mouthwash. So as an example, I can take the Dunn Humvee data and very much target my in-store, my in-store digital couponing, my circulars to that consumer in a far more effective way than we've ever been -- we've ever had in the past. There are now ways where you can measure. You can buy databases within the U.S. that measure all the purchase patterns and all the Internet habits of a consumer. So let it be known that everyone is watching you. And they know everything that you're doing from an Internet standpoint, how you jump around the different sites, what you're buying. And we can target those consumers with our own messages to be far more effective. So if we know there's a high-end beauty consumer looking for beauty products, we can target them with Optic White messaging. Colgate Tom's of Maine, which is our natural brand that we have in the U.S., we know exactly who's buying natural products now. Before, we had a very wide definition of that in the past. We now can be extremely targeted from that standpoint. And then lastly is what I mentioned, the marketing mix, which allows us to truly get great, great analytics on the effectiveness of our communication strategy, so how effective is print versus radio versus TV, how effective is in-store promotion versus TV, and therefore make sure that we're allocating our spend more effectively. On your second question, Procter & Gamble, they have been consistently aggressive since I joined the company. I ran Mexico for 3 years, saw them come in the oral care category, go out of their oral care category. And they're back in again now. So they will continue to knock on the door. The good news is when they open that door, we are ready with a welcome party that has successfully allowed us to continue to build our share on a global basis particularly in the oral care arena. They've announced a significant global savings, as you heard, as had we. And so we feel that we are very well-prepared not only from an innovation standpoint based on the pipeline that we have moving forward, but certainly from a P&L standpoint to defend it should they increase their spending. And at this point, we feel very comfortable given the success that we're seeing from both the top line, the bottom line, but importantly a market share standpoint.
Just conceptually, I was wondering something. You talked about simplifying your structures. You're discussing Latin America, Eastern Europe, emerging countries with certain disciplines. On the other hand, you're pushing the Optic White with personalities that may not travel in certain countries. How do those, I guess, 2 things work with each other?
Noel R. Wallace
I apologize. I wasn't clear. The Kelly Ripa use in Colgate Total as an example is only in North America, so both Canada and the U.S. We would have a very similar positioning around the world. But we would use either different personalities or different executional formats in order to deliver that. Optic White, very, very singular positioning all across the world, executed through 3 different global campaigns. And based on the area of the world that we're in, we would have a unique global campaign for that specific area. So I apologize. That was...
A little bit of the scalability, I guess.
Noel R. Wallace
Big countries. But I mean, I guess, a German personality may not work in Poland.
Noel R. Wallace
Absolutely not. And in that case, we would -- we may use local talent. But we try to harmonize it as much as possible. So we try to shoot ads that we believe would carry across multiple regions in a way that will drive more efficiency. We ultimately test those in most of our core markets to ensure that the communication of value is being delivered.
I have a higher-level question maybe. The -- increasingly, there is anecdotal evidence that investors are shifting to equities and search for a yield. They find that yield in consumer staples stocks. Is that a shift that you perceive along your investor base? Is there an emergence of a new investor base for yourselves and consumer staples companies? And if that's the case, is there maybe a conflict of interest, those investors pushing you to focus on dividends today rather than on growth tomorrow?
Noel R. Wallace
I will let Bina answer that one. I -- we are not a dividend yields that -- we've never touted ourself as a dividend yields. So I don't know. We've increased our dividend for how many years now?
Delia H. Thompson
Oh, 40, almost 50, I think.
Noel R. Wallace
Delia H. Thompson
Yes. So actually our shareholder base has been quite consistent. We see some -- and I was saying our top 3 shareholders, they've been relatively stable. People may be trading around the core position, but it tends to be quite stable. I don't see the value or the yield of investors shifting into the stock. We do get questions often about where we'd like to put more money into dividends or share repurchase by levering up the balance sheet. We choose not to do that. We think our balance sheet is where we want it to be. But I would say the shareholder base has been pretty consistent over time. I don't know, Peter, if you have any insight into that.
No, I think -- we have -- as Christoph [ph] is referencing here, our staples team has noted that there's been a number of incoming calls from traditional fixed income investors on a staples-oriented universe here. But the company manages its business and grows its business. And things are fleeting from time to time, but I'm not sure it's going to alter the way they do their business.
Delia H. Thompson
It's not all, but we welcome any new investors.
Great. I think we're out of time. We'd really like to thank the Colgate-Palmolive Company for appearing at Americas Select and hope they'll be back with us for many years to come. Thank you.
Noel R. Wallace
Bina, thank you very much.
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