Dividend Aristocrats Part 41: Colgate-Palmolive Company (CL)

Competitive Advantage

Colgate-Palmolive’s competitive advantage comes from its strong brands. The company is the global leader in toothpaste.

Source: 2015 Consumer’s Staple Conference, slide 83

And the global leader in manual toothbrushes.

Source: 2015 Consumer’s Staple Conference, slide 83

And the global leader in fabric conditioner

Source: Third Quarter, 2015 Presentation, slide 97

And is #2 globally in mouthwash

Source: 2015 Consumer’s Staple Conference, slide 92

Finally, Colgate-Palmolive is also #2 globally in bar soap.

Source: Third Quarter, 2015 Presentation, slide 96

Colgate-Palmolive has managed its brands well over the last 20 years. The company has grown its brand strength through product innovation and strong advertising spending.

Colgate-Palmolive has spent over $250 million per year on research and development in each of its last three fiscal years.

The company’s significant research and development spending has driven growth in both developed and developing markets as the company’s new products replace older products and attempt to gain share from competitors.

Colgate-Palmolive supports its brands with large advertising spending as well. The company spent $1.8 billion on advertising in full fiscal 2014; 10.3% of total revenue. Colgate-Palmolive buys significant brand recognition and consumer attention with its massive advertising budget.

Colgate-Palmolive’s large size and global reach coupled with its research and development and massive advertising budget gives it lasting brand power. The company’s brands and size give it a strong competitive advantage that new entrants to the market cannot match.