Colgate-Palmolive Co (NYSE:CL) Deutsche Bank dbAccess Global Consumer Conference June 9, 2020 10:00 AM ET
Noel Wallace - Chairman, CEO & President
Panagiotis Tsourapas - Group President, Latin America & Asia Pacific
Conference Call Participants
Stephen Powers - Deutsche Bank
Good morning and good afternoon, everyone. I'm Steve Powers, Deutsche Bank's lead U.S. consumer packaged goods analyst. I'm thrilled today to welcome Colgate-Palmolive back to the conference.
With us today are Chairman and CEO, Noel Wallace, who joins as for the first time after assuming his current role. Panos Tsourapas, Group President [ph] for Colgate Latin America and now also Asia Pacific region, the latter of which he assumed responsibility for last August; and John Faucher, the company's Chief Investor Relations Officer.
Guys, welcome back to the conference. It's not face-to-face in Paris, but we'll make the most of it and look forward to a redo in person sometime soon.
To kick us off, Noel and Panos will run through a brief presentation to frame the company's strategy and level set of priorities, both near term and long term. And then we'll open up for broader Q&A. And all those listening via the conference portal should be able to submit questions at the bottom left of your screen.
Apologies for the technical difficulty. Before we begin, I'd like to call your attention to Colgate's Safe Harbor statement, which should be on screen in front of you. With that, Noel, I'll pass it over to you.
Well, thanks, Steve, and good morning, and good afternoon to everyone. I certainly wish we were all in Paris right now. Joining me today, as Steve mentioned, is Panos Tsourapas, our group President for Latin America and Asia Pacific.
I thought I'd begin kind of where we left off in our Q1 earnings call, which was discussing COVID and provide you a quick update. No fundamental change since our Q1 earnings call. Pleasingly, our factories have broadly remained open, I think a testament to the incredible resilience of our supply chain. And importantly, India, ramping back towards normal as we speak.
We have seen several emerging markets, particularly Russia and Brazil, with a rising case count, which we will watch very carefully. And in Africa, obviously, continued disruption across that region as countries are taking important steps to halt the spread of the virus, which obviously has implications, as you see transfers of goods and opening up of major economies.
Pantry destocking has begun as we predicted and we discussed in Q1 and anticipated, notably in Europe, and you've probably seen that recent scanner data.
Importantly, operationally, our teams continue to execute really well. I think we've been extremely pleased with the resilience and agility everyone has shown. And certainly, as we think about agility, a key capability that we're trying to build into our organization and the crisis certainly has accelerated our learning in that area.
First and foremost, the safety of our employees remains a top priority. We've begun a staggered return to work, which is great to see, in markets where regulations and policies allow us to do that. As you can imagine, this is primarily focused on jobs that need to be done at a facility. So for example, we moved our scientists back into our R&D facilities, those that are focused on obviously developing our next-generation innovation.
And importantly, we continue to progress on our global community efforts. We recognize our responsibility in that area. This includes our partnership with the World Health Organization, and as you heard, our distribution of 25 million bars of soap to those in need all over the world, importantly including instructions on health and hygiene practices that are necessary to help combat the COVID virus. So today, we'd like to provide an update on our strategy, where we are, how it positions us, importantly, for growth, particularly in an uncertain world moving forward. As you know, our focused strategy is behind 4 key segments: Oral Care; Pet Nutrition; Personal Care, including our recent premium skin health business; and Home Care. Four segments, which, as you probably know as well, all play an important role today in meeting consumers' changing behaviors, particularly in the health and hygiene space.
A focused strategy that, over the last 18 months, has accelerated net and organic sales growth for our company, returning us to our long-term growth target range of 3% to 5%. Happily, this acceleration was driven by increased investment behind our purpose-driven brands. We talked about how important purpose was back in CAGNY. And we've done a lot of work on our innovation strategy, getting that right, focusing on fewer line extensions and really trying to deliver real, impactful innovation across our big core businesses, accelerating our innovation in the premium segment as well as rapidly growing adjacencies.
And a strategy that has us building significant muscle in new areas for the company that we think will stand well as we move out of the crisis, particularly for the next couple of years, and that's in the areas of e-commerce, digital, and data and analytics.
It's a focused strategy that has delivered broad-based organic sales growth, which we think is very, very important for us across our geographies and categories in 2019. We delivered growth across all 4 of our categories in 2019 and all 6 of our operating divisions in 2019. And the underlying quality of that growth was well balanced across both emerging and developed markets, with a really good price/mix -- mix of price and volume. For our growth to be sustainable, we recognize how important it is this balance continues, both in emerging and developed, as well as managing price and volume in an ever-changing marketplace.
Pleasingly, our organic sales growth has accelerated as we went throughout the year. You saw that obviously in the fourth quarter and showing that our strategies and investments are paying off. And we continue to see that acceleration in the first quarter with Q1 up 7.5% versus the same period a year ago, a strong start to the year. Although obviously, some of that was built based on some pantry load that we saw coming in the first quarter where we see some of that coming out in the second and third quarters.
To remind you what we talked about in our Q1 earnings call, we highlighted the uncertainty and unpredictability of the second and third impacts from the crisis. It's the unknowns of the unknown, so to speak. That includes shutdowns, other supply chain disruptions, continued volatility and consumption patterns, quite frankly, all over the world, and the economic volatility that will likely come after the crisis is over. And as a result of that, we'd like to withdraw our 2020 guidance in 2020.
As we also mentioned in our prepared comments in our Q1 call, our sales momentum continued in April. We saw good growth in that month, and we expected foreign exchange, unfortunately, to have a negative mid-single-digit impact to our net sales.
In terms of our priorities for 2020, we're going to focus on successfully managing through the crisis. It's not over, but staying true to our core values. We realize how important that is for not only our teams and then there's safety, but the communities in which we serve.
The heightened focus across the organization, in my view, has really helped us execute far better than we ever have in the short term, making decisions quickly, getting the agility on the grounds to the teams where the decisions need to be made, and ensuring while we're doing that to have an eye on the future to make sure our long-term strategies are sustainable and enduring, and we can continue that momentum for the foreseeable future.
And I have to say, I'm incredibly proud of what our Colgate people have achieved this year. The incredible resilience that they've shown to weather the storm, so to speak, I think, is a testament to the leadership and the depth of talent we have across the organization.
So as we look forward, I think we're very well positioned. We have an exceptional and experienced management team. You'll hear from one of those members today. And we understand how to deal with the crisis. For years and years, we've dealt with volatility in markets like Venezuela, Russia, Argentina and others. We have a really strong portfolio of trusted brands in growing categories today, particularly in the health and hygiene space. And all those categories compete across multiple price points, which we think -- which we believe position as well.
We have, over the years, built widespread channel capabilities, including more recently a real focus around growing our e-commerce business. You saw the great results we had in Q1, particularly in North America. Our supply chain throughout this crisis has been incredibly resilient. But I have to say, they're very focused on the long term. They don't want to be complacent. They're looking for the ability to build more flexibility moving forward and continuing to truly automate our supply chain around the world.
And we have a focused strategy that we believe will continue to unlock growth opportunities in the recovery in terms of how our categories are positioned and the specific innovation that we're looking to bring in a post-COVID world.
Growth remains our top priority as we have discussed for the last 18 months. And we thought now that I have Panos take you through our specific growth strategies and how we're adapting to some of the changing consumer behaviors and market needs that we see in this environment. Panos, over to you.
Thank you, Noel, and good afternoon, Steve. Good afternoon to everybody. I'm happy coming back to the conference after 2 years, even though not in Paris, as Noel said. But let's hope that next year, we will be back to normal. So talking about growth. The key growth drivers we deploy are about improved brand building and core innovation, innovating to gain share in high-growth segments and adjacencies, expanding in new channels and online and, something very strategic for us to continuously invest in, to drive penetration in growing populations. And I'm going to talk more specifically about them and share with you some examples on key activities for each one and how we adjust them in this new environment.
Starting with how we are focusing on brand building and core innovation. Core innovation is very important under the current market conditions, and we need to ensure that we have very strong activities. Our core brands have the highest penetration. They are trusted by consumers for their quality and efficacy. And these are characteristics which are gaining importance in the current environment.
They also provide choices across price points in a period where many consumers across the world do face economic challenges. And from our retail partners' perspective, our core business, considering the market shares that we do have, have a significant footprint in the categories we operate. So innovation, focus, activations on this part of the business brings multiple benefits for them, and it is very much welcome.
I will share with you some examples across the world on activities on core business. As part of our advertising strategy, we deploy an equity campaign behind Colgate to support the Colgate master brand. Under the current conditions, we adopted this campaign under the theme of driving optimism in a very authentic and engaging way. Unfortunately, the format -- the virtual format doesn't allow us to share with you some of the videos.
But the results were exceptional. In Latin America, in the course of 5 weeks, we did reach 145 million people, achieving double the historical engagement ratios. We are rolling out the restage of our base Maximum Cavity Protection toothpaste that has major penetration across the world with a new formulation which offers the best cavity protection. We did relaunch with a new better formulation, our Colgate Total toothpaste in over 100 countries with very good results in most markets.
And moving to Personal Care, a brand that is very relevant in today's environment is Protex. Protex is the leading antibacterial soap in many parts of developing markets we compete. We are relaunching it with a new formulation based on flaxseed oil, which is a more natural formulation, a key benefit consumers look for today. And the product not only eliminates 99.9% of bacteria, but strengthens the natural defense of the skin, offering 12-hour protection. It is being rolled out in the market as we speak.
In the Home Care category, we are introducing a new fabric softener line with a plant-based formulation. Actually, it is the first fab con with transparent formula, and it's having fully recyclable bottle and cap elements, which are also very important nowadays.
My last example behind the core business relates to Hill's and the importance and the impact of design in the business. If you see on the right side of the slide, this is our new Science Diet packaging. The Designalytics Effectiveness Award was created to help elevate the role of packaging design by highlighting the potential significant financial impact it can have on consumer brands. Winner selection is not subjective, it's entirely data-driven based on sales performance in the marketplace as well as quantitative consumer testing.
This year's award went to the company who are the -- Beardwood that designed this, and are members of our global design team for their work on Hill's Science Diet. The Designanalytics evaluation revealed that pet owners are twice as likely to prefer purchasing Hill's Science Diet new packaging versus old. And this was confirmed by the sales data. During the 6 months after the launch with a new design, the brand grew at high double-digit rate compared to the 6 months prior period. And it contributes significantly to the very good performance of our Hill's business.
The second key driver, as Noel also mentioned, is about innovation in high-growth segments and adjacencies. Whitening toothpaste segment is very important in most markets around the world. And we will share 2 very good examples from different regions on what we do in that space. In the U.S., we launched our best hydrogen peroxide formulation to date with ability to remove up to 10 years of yellow stains in teeth at a very premium price point at $7, with very good results, as the chart illustrates, hitting over 2% market share, which is incremental to our Optic White, which is our whitening -- sub-brand whitening franchise in the U.S.
In Latin America, we introduced Luminous White Charcoal, again, as the chart shows, with very high market share incrementality. And in the emerging Naturals segment, we introduced Colgate Natural Extracts with Charcoal, which brought us significant share in incrementality in the 2 largest markets in the region. These activities in Latin America, amongst others, puts us in a position to realize market share growth on a year-to-date basis versus prior year, something that significantly contributes to the very strong performance of the Latin America region today.
Moving to Personal Care. An example of strong brand performance where innovation and positioning are very relevant is our Sanex European Personal Care equity. The position of the brand is about protecting your skin, its healthy skin, something very relevant under the current environment. And as you -- as the chart demonstrates, we've got leadership in European markets we compete in body wash.
Talking about expanding in new channels and markets. We have talked the last couple of years about our strategic expansion of our elmex European brands in new markets outside Europe, and we are doing very good progress here. Brazil is a key market where we launched elmex in the pharmacy channel at uber-premium price point. And you can see the steady progress we are making in terms of market share, growing even under the current challenging conditions. This is toothpaste, we have the same strong results in toothpaste -- in toothbrushes as well.
Trade standard shifts can be significant and can impact the performance of the business, obviously. We see this with e-commerce, but also beyond e-commerce. So it's key to grow above the market and to have ideally higher sales versus average in the growing channels in each of the markets we compete.
If I look in Latin America, the 2 fastest-growing channels are cash and carries and discounters, and we do very well in both. If you see Brazil, that is presented in this chart, we grow in cash and carries, which is by far the fastest-growing retail environment in the last years, above the market. And our market shares, which are in the numbers in the right side of the slide, are significantly higher than the national average in all the major categories we compete: in toothpaste, in toothbrushes and in bar soaps.
The same happens with discounters where our brand development index is nearly double than average. So we are very well positioned in the growing channels in the market. And as they grow in importance, our market position becomes even stronger.
Talking about online e-commerce, it's, I guess, in the headlines everywhere in the last month, and it's growing across the world. So maximizing the growth of our online business is one of our key objectives. And it's also one of the key contributors of our sales growth. If we look at North America, it's very well documented, e-commerce has an explosive growth due to the COVID conditions. We deployed major activations across all platforms, and our net sales actually more than doubled.
In Hill's, high growth in e-commerce is a key contributor to the strong results that we have in this business. And this chart depicts the sales trajectory, the sales projection -- progression of our business with Chewy, one of the key online retailers for pet food. And as you can see, we grow significantly with Chewy for 14 straight quarters by deploying successful plans to acquire new customers, but also to increase compliance of our current customers, particularly increasing the number of pet parents that they are in auto-ship scheme, something that has very obvious benefits in terms of loyalty for our business.
But I would say beyond established e-comm markets like the U.S., we do very well in the emerging e-commerce markets like Southeast Asia where Shopee and Lazada, the partners of JD and Ali, respectively, grow very aggressively our strong focus and effective activations in the region, leading us to double our e-comm sales in the first quarter.
Finally, an area which is very strategic and very important for us is the systematic investment to promote oral health and to drive penetration of the Oral Care family of products. We have talked about our Bright Smiles, Bright Futures program. We have educated 1 billion kids today on brushing, and we aim to reach 1.3 billion by 2020.
And thanks to close cooperation with local authorities, oral hygiene, the education around oral hygiene, is getting into schools' curriculum. Like in Mexico City and Veracruz regions of Mexico, where we reached 2.2 million kids, 2.2 million kids are getting educated in their classrooms around oral hygiene, and we plan to expand in three new states.
And in São Paulo, Brazil, the largest city in the country, where we just agreed with the Ministry of Education to help provide same oral hygiene training to 3.5 million kids in public schools. I have to say, we are very proud for these initiatives and the potential positive impact they have to the communities we do share with our products.
And with this, I will handover back to you Noel to talk about sustainability and some closing comments. Thank you.
Thanks, Panos. So clearly, we're laser-focused on growth, as we've been discussing for the last 18 months. And we know it's vital to maintain that momentum and build ongoing sustainability across the business. But we also recognize that our overall sustainability strategy goals need to continue to be increased. And we've done a wonderful job through 2020, and we're now in the midst of refreshing our goals for 2025.
Specifically in that light, we recognize that as the -- one of the highest penetration brands in the world, we have this incredible opportunity and we're uniquely positioned to work with consumers to build a healthy, sustainable future through both our actions and our education with them. And so we're going to use that household penetration as a new way to express our commitment to sustainability and outline our 2025 sustainability goals.
You see reflected on the chart here that our new expression is: Colgate invites 1 billion homes to create a healthy and sustainable future. We understand the responsibility we have as a global brand and a brand that is highly penetrated, and we believe we can have the proper influence on consumers to improve the world moving forward.
Here are a few highlights of our strategy, our 2025 goals. You'll see there are many in very specific areas. They are bold, they're ambitious, but very achievable. I won't go through them all, but let me focus on 2 that are very relevant today.
Zero waste. We already are a leading -- we lead the world in a number of zero-waste facilities across the world both in geography and scope. And we have a plan to get to 100% zero waste facilities by 2025. We know plastics is also a growing area of concern for consumers, and we are deeply committed to lowering our usage of plastics. As we have discussed with you previously, we've launched the first recognized recyclable toothpaste tube in the world. And importantly, we're going to be sharing that technology with others, so we can ultimately get to a time when all tubes in the category are recyclable.
And everyone can have access to that report. If you go on to colgatepalmolive.com, you can access it through our sustainability tab. And you can see, one, the terrific progress we've made in delivering our 2020 goals, and the ambitions that we set for ourselves and our teams for 2025.
So quickly to finish up. I think we've got the right portfolio in place to win in this crisis and post the crisis. We know we have the right organization. The Colgate bench has always been strong with incredible experiences dealing with these types of things. We've regained organic sales growth momentum that we needed to, to deliver, importantly, future growth for the business. And our focus is obviously continue to do that in the back half of 2020 and through 2021.
And with that, Steve, let me turn it back over to you for any questions.
Q - Stephen Powers
That's great. Thanks to you both for running through that. I guess the first question is, as you think about all that you've been prioritizing in the past 12 to 18 months, Noel, since you took over as CEO, much of which I think you and Panos just took us through in some respect, do you think that work has, in some ways, better prepared you for this moment around COVID-19 than would have been otherwise? And as you think about how the organization has met the current crisis, which you sound generally pleased with, how much of that has required a whole new thinking versus more perhaps just an acceleration of the strategy that you were already employing?
Yes. Perhaps -- good question. A little serendipity. I think as we -- as a team, as we really started to refocus our orientation around growth some two years ago, we recognized that we had incredible strengths to build from but that we needed to make changes. We needed to make changes in how we thought about innovation. You've heard that loud and clear through our focus on our core businesses, which are big and important around the year and carry a lot of the equity attributes of our brands.
We needed to rethink about premium innovation, which is a space that we are significantly under-indexed in. And even in a recession, we believe affordable luxury will still have a play and will position us for opportunities and growth moving forward. We recognize the channel shifting in consumer behavior was happening faster than we were adapting to that, and we needed to make the necessary changes both in our structure and our approach. And you've seen that, I think, come through in terms of our channel expansion with brands and the growth we've seen, particularly in the focus that we've given to e-commerce.
All of those things have positioned us extremely well. But at the core of all of this, I think, is how do we continue to adopt our culture in the company. And we recognize that we needed to be agile. We recognized that we needed to work differently as an organization and as a team. And we've spent the better part of 18 months really refining those processes and thinking about how we want to operate differently moving forward. And lo and behold, COVID hits, and all those things we talked about, streamlining processes, agility, flexibility in our operations, getting the innovation right and reacting quicker, all have played out extremely well for the crisis.
And we were able to really hit the ground running day 1, transferring best practices around the world from Asia to Europe to LatAm, to the U.S. and moving with very little disruption. And obviously, there's a lot of unpredictability and uncertainty moving forward, but we feel we're well positioned for that. And particularly our portfolio, as you look at a post-COVID environment where there's no question we will enter a recession in many geographies, and the fact that we have historically been very strong across multiple price points, particularly entry price points, we think positions us well.
So as you think about the post-COVID landscape, are there elements of what you've been working against that need to be rethought or added to? Or is there a new leg to the strategy influenced by what we're going through now that will play a key role as you think about the remainder of 2020 and into '21?
Yes. Part of the strategic work that we undertook was really looking at capabilities. And we really fine-tuned it to 3 important areas. We talked about innovation. And fortunately, we've had a couple of years' head start in getting our core innovation accelerated. And our core innovation, as I mentioned, we believe, plays really well in a post-COVID world, particularly as economy is in a recession and consumers are looking for perhaps more value, but value that delivers true efficacy and true benefits to them. So we're very focused on that aspect.
You will still see premium be a core part of our strategy. As I mentioned, we're very under-indexed, but we will shift a little bit more to core given where we think consumers are moving. But fortunately, the strategy that we had in place, Steve, is such that it's nuanced in terms of what we need to change. So we're not making wholesale changes to how we want to execute around the world. And from that perspective, we think that distinguishes us right now, that we're not making big changes to how we operate from a supply chain standpoint to how we want to innovate, to the focus areas that we think our priority growth area. So right now it's nuanced.
Second one is around digital. We've been on a focused strategy for a better part of 2 years now as well on how do we improve our digital capabilities, how do we digitize the company. And there's so much opportunity yet in that space for us moving forward. I think we're just getting started, quite frankly, in terms of how we think about digitization across the organization from both our media, our content, our data piece, to our supply chain, to our R&D organization, even in our HR and finance organizations, we're thinking how to digitize and really drive productivity through that initiative.
And the third is what we've talked about quite a bit is our channel strategies. And we think the changes that we need to make around channels are exactly what we were doing. We were focused on e-commerce. We were focused on thinking about our discounters around the world very differently. We were focused on taking our brand portfolio around the world in locations where it was most relevant. And we've talked about elmex and meridol where we go into high pharmacy areas around the world, where pharmacy is an important retail environment and we're under-indexed there. We didn't have the right brand strategy, so we're thinking about that differently.
And then lastly is obviously position us well through the acquisitions. No question, the skin health will go through a short-term disruption. We spent a lot of time going back to '08 and '09 to understand how skin health brands performed, premium skin health brands, and there's no question they came out of that actually quite strong. But during the 2 years of recession, they suffered. We're pivoting as necessary to adopt to those changes. But long term, the economics of that business both from a financial and a consumer standpoint are very, very attractive to us. And we think, quite frankly, the time that we're spending now to get the fundamentals right and the capabilities right will position us well as we come out of the crisis.
Great. On your first quarter earnings call, you spent a good deal of time kind of walking around the world outlining what you were expecting from a consumption pattern standpoint and also just the general pace of economic reopening, just general economic activity. Has what you've seen so far in the quarter, if you could just match what you've seen against what you had said there, are there are any callouts in terms of the progress you're seeing? And I guess I'm particularly focused on the U.S. and your BRIC markets, but any color you have would be welcome.
Sure. Listen, let's me start with the -- from a category perspective first. Around the world, we've continued to see those categories that have certainly benefited from COVID. And that is what we would say more systemic behavior changes that consumers are driving. And we think those are quite sticky. There's categories like liquid hand soap that continue to be very robust around the world. Our dish business around the world, as consumers work from home, we've seen acceleration in that category.
Obviously, our Home Care products, specifically cleaners. And our sprays in Europe, we've seen behavior changes where consumers are obviously disinfecting their homes more often and cleaning their homes more often. So those categories, we think, will continue to be to be quite healthy going forward. Will they stay at the current levels forever? Absolutely not. And we're watching that very closely. We have seen other categories post the pantry load come down in recent weeks. You've seen the scanner data obviously in Europe and the scanner data in U.S. that reflect that.
As you look geographically, clearly, the U.S. is -- and the emerging markets specifically are really benefiting from the pantry loads over time. And obviously, it's bigger homes, more per capita income, consumers can handle more product in their homes. And you've seen that play out both in the U.S. and in Europe. And we -- as I mentioned earlier, we've seen the destocking start certainly in some of our categories in the U.S. But the U.S. continues to be quite healthy. Europe, obviously, post the pantry load, we've seen a slowdown in Europe in terms of category performance.
Africa has been somewhat of a surprise, as you would expect. As I mentioned, the countries have had to really lockdown, I think, given their concern around the capabilities they had to handle the crisis, particularly from a health care standpoint, and that has created more disruptions in that market. We're starting to see -- in fact, I was on the phone this morning with both our President of Asia and our President of Africa, and they both have remarked that all those economies are now starting to open up, and so we'll see improved performance in the categories moving forward.
Asia, as we've mentioned, a lot of disruption in the first quarter, particularly out of India. I mentioned upfront that India is starting to come back and particularly our manufacturing standpoint. We saw economies lock down, whether it was in the Philippines for a period of time, deep recessionary aspects in Thailand. So a lot of volatility in that region, but we're starting to see our -- particularly our China business, which we've talked about at length, we're starting to see the recovery there as consumers move back into the brick-and-mortar. Obviously, online was still very robust but not enough to offset some of the declines they saw in brick-and-mortar.
And lastly, in Latin America, our focus in Latin America right now has obviously been to recover the transactional impact moving through the P&L through -- as a result of the foreign exchange headwinds that we've seen over the last couple of months and ensuring that our revenue growth management strategies are there. You heard Panos talk about good market share growth across Latin America, and that's important particularly in an environment where you're taking pricing, and we'll continue to watch those regions quite closely. Brazil, somewhat of a concern as you see the increase in cases there, but our teams are doing a good job to deal with the situation.
Great. And maybe if we drill down on where you ended up in Latin America. Maybe Panos, maybe this is a good question for you. I guess can you -- I guess, what's your confidence level at this point, through pricing and revenue growth management broadly, that you will be able to recoup at least a good portion of that transactional FX headwind? And I guess how do we guard against -- at least an investor perception, that if we kind of rewind the clock 5 years ago or so that too much pricing was gone after in your region to the extent which caused sort of derivative effects afterwards, they had to be recovered. So I guess the question is, how confident are you in your progress? And how are you mitigating against the risk of a repeat of what happened in the middle of last decade?
Sure. Let me provide some opening comments to that, Steve, and then I'll let Panos answer that more specifically. Listen, pricing is our best brand. We have historically, over decades, recognize that, ultimately, you've got to get the pricing through the P&L to recover transaction. There may be some short-term blips associated with it, we will certainly see volume come down. But we've learned over the years, the best way to recover that is you've got to continue to provide a plethora of innovation in the market across all price points. And we've learned sometimes that we can't be overly focused on one segment, that we have to have broad-based innovation in order to ensure the innovation plus our revenue growth management strategy, which has been fine-tuned over the last 2 years, positions us well to recover as much of that pricing as possible while maintaining our market share growth.
No question, you will see some volumes fall off in the short term. But long term, it's getting -- protecting the margin that we can continue to invest in building the brands and delivering innovation to the market. In the end, that's a long-term strategy that we've learned plays out the best. We need to elevate our innovation in that respect. Panos, anything you want to add to that?
No, I think you -- this is what we do. And the only comment I would add is that we are taking pricing. Indeed, it's our best friend and there is no other option when you operate with this level of devaluation, that our pricing is not excessive or nonprudent. And we deploy pricing in a very, I would say, diligent way. We do list price adjustments. We adjust our promotional plans. We deploy other tools around the revenue growth management toolkit. We deploy very specific innovation plans, entering potentially new price points and making sure that we offer different choices to consumers. And we monitor the business on a continuous basis. So when the balance between volume and price starts turning negative as a final outcome, we do the necessary adjustments.
So I have to say -- I wouldn't say that I am confident, as you said, Steve, because in this world, nobody knows how the external environment could evolve. But I would say I'm rather optimistic that we will be able to manage well as we have managed in all previous crisis historically in Latin America. And at the end of the day, we do emerge stronger. And if we see our market share performance so far and the fundamentals metrics out of the business, we do well. We do better than the competition. So we have every reason to be positive for the future.
Great. As I think about different U.S. CPG companies and their philosophy, there are those who manage to dollar-based metrics and those who manage to constant currency-based metrics. I think you guys have always been on the dollar-based side of that question. And there are also companies that manage the margin or that now, increasingly, are managing to a dollar-based profit growth objective. How do you think about those debates to the extent that that's too strong a word or a fair word? And where do you think the right points of emphasis for Colgate are?
Well, it's a moving target, Steve. It's a balance all the time, and it's -- I think it plays back into discussion where we need to have flexibility and agility to adapt to local situations. And historically, we have always believed that growing dollar EPS in the long term is the best way to grow shareholder value. And we will continue to be resolute in that regard. But we manage a lot of factors in that regard. There's a lot of inputs that go into making decisions, from market share to margins, as you mentioned, to transactional costs, to translational impacts, to the competitive situation. So all of those decisions are taken where they need to be by the teams that best understand what's going on in the local marketplace.
But in the end, if you boil it down to just a couple of things, we're looking to drive consistent top line growth, getting the leverage through the P&L, however that unfolds, to ultimately deliver improved earnings per share growth. And to do that, a lot of decisions have to be taken on the ground and it starts with, in my view, with a very clear strategy on what you're trying to execute. So you don't get into a lot of debates and tensions on what you're trying to achieve. Obviously, the numbers in the end are the numbers, but we're very focused on ensuring our teams are clear on what we're trying to achieve and the choices that we're making and the bets that we're making in that regard. So it's a balance across multiple dimensions, Steve. And we continue to be consistent with what we've done historically, but recognizing that we have to be adaptable to the changing circumstances, and we believe we're doing that.
That's great. Okay. Well, I think we're about out of time. But I guess I'd like to close with a question in terms of if you were advising investors as to what the most critical success factors are for Colgate over the next, say, 6 to 9 months, where would you point their attention?
Yes. Again, very consistent with what we've talked about today. You need -- companies need to have clear strategies executed. Particularly big global companies where you're operating in 200 markets around the world, strategies that build on both the core and the premium opportunities that you have. You need to have strategies that are adaptable to the rapidly changing consumer behaviors. And we're using insights and data and analytics far better than we ever have. Our teams are able to react really quickly based on inputs and adjust that accordingly in the marketplace. That's the agility that we talked to earlier.
We need to ensure that we have an innovation strategy that is not only short-term focused, but long-term focused as well. And we've made quite considerable change in that space around our organization to ensure that we have dedicated resources on the short term and dedicated separate resources on the long term, and not mixing the two. We think we're going to get much better quality innovation. So a clear strategy, making the right choices, having the right portfolio of brands, particularly across various price points in a recessionary economy.
And then ultimately, we talked a little bit about it, which is something that's so important to me, and that's a winning culture. And a culture that we believe is proud of what they're doing in the communities in which we serve, a culture that's leading and developing people for the future and a culture that is built on strong collaboration and an innovative spirit. So ultimately, that's what it really comes down to. And we're quite excited about what we've got going on, but we've certainly got a lot to do moving forward.
Well, the cultural momentum that you've put in place is pretty evident from the outside. We didn't get into it, but a lot of what you've done around innovation with some of the better leveraging of predictive tools and data analytics is a topic onto itself, but we'll leave that for another time. Noel, Panos and John, thanks so much for your time and for your participation. And I hope everybody, including the three of you, have a great conference.
Thank you, Steve. And be safe, everyone. So long.
Thank you. Thank you, Steve. Thank you, everybody. Bye, bye.