CL - Colgate-Palmolive Company (CL) Presents at Barclays Global Consumer Staples Conference (Transcript)
2023-09-06 11:05:19 ET
Colgate-Palmolive Company (CL)
Barclays Global Consumer Staples Conference Call
September 6, 2023 07:30 ET
Company Participants
Noel Wallace - Chief Executive Officer
Conference Call Participants
Lauren Lieberman - Barclays
Presentation
Lauren Lieberman
Good morning, if everyone can just take their seats. We are going to kick off Day 2 of our conference and we are very happy to have – to welcome back, I should say Colgate-Palmolive’s CEO, Noel Wallace. Over the past 4 years, Colgate has consistently executed [Technical Difficulty] innovation, digital, data and ESG. I am going to turn the stage over to Noel for a small presentation, and at the end, I am going to come up and we’ll do some Q&A together Thanks.
Noel Wallace
Well, thanks, Lauren and good morning, everyone. I appreciate you getting up so early to come and learn about our business a bit. It’s great to be back in Boston. I trust everyone had a restful and relaxing Labor Day weekend. And for those of you that had kids going back to school, I hope that was a successful launch to the new school year. Speaking of back-to-school, I’d like to run a new equity spot that we just launched in the U.S. on our Colgate brand.
[Video Presentation]
Noel Wallace
Okay. So I am going to start off highlighting some of the discussions we had on the Q2 call, which obviously we think was a very strong part for the business and reflected more flexibility in income statement and certainly a lot more [Technical Difficulty]. Importantly, our 2-year stack was up on organic volume and pricing for the quarter as well as organic sales. Our gross margins were up 80 basis points. But if you exclude the impact of private label, which came through the Red Collar acquisition that we are still working through, our gross profit was up 150 basis points. And remember, our logistics is in SG&A and we don’t include that in our gross profit calculation. If you include logistics would be up another 100 to 150 basis points. So, terrific performance on gross margin. That allowed us to continue to accelerate our advertising in the quarter. Our advertising was up 20%. And importantly, despite the 20% increase in advertising, we delivered double-digit operating profit growth and EPS in line or slightly ahead of consensus, which was terrific for the business.
The improved cash income coming through the P&L allowed us to improve cash profits. We have done a lot of work on working capital as well, which I will talk to a little bit later. So cash flow was up 59%. Free cash flow was up actually 81%. And as you see in just a moment, we continue to have nice momentum on our global market shares, particularly in the toothpaste category. The strength of the quarter allowed us to raise our outlook for the year. This is what we discussed in the Q2 call. We expected our sales now to be up 5% to 8% organic in the 5% to 7% range. Gross margin will be up on the year. Likewise, we will continue to invest in building brand health and market shares and executing our pricing strategies and volume for the balance of the year. So advertising will be up on both the dollar and a percent to sales basis.
Base business EPS is expected to be at the high-end of mid-single digits now and grow net income and obviously improved working capital to continue to accelerate cash flow and our capital structure, which will allow us to continue to pay down debt and buy shares back. The strategy is quite consistent with what we discussed for the last couple of years. We have continued to really sharpen the execution against our strategy and that’s really going to be my focus for today. The strategy is driving consistent top line growth for us. We are leveraging improved capabilities across the organization. I will talk about the fact that we have been building those capabilities for the better part of about 1.5 years. Now we are really in the process of scaling those acoustic organization. Funding the advertising continues to accelerate the top line growth of the company. We are very pleased with the execution of our advertising and more importantly, the capabilities that we are building in that space, reaccelerating cash flow, as I just mentioned, and ultimately deeply focused on driving TSR for the balance of this year and into ‘24.
So, let me talk about the strategy and why it’s working for us. Consistent top line growth is what we set out to do in 2019 when we embarked on our new strategy for the company. You have seen 18 straight quarters of growth at or above our long-term guidance of 3% to 5%. And importantly, the quality of that growth has been across all categories in which we currently operate in and across all divisions. Now if I grow across all divisions, I wanted to take it more with the highlight Latin America, which is our largest division in terms of sales and in terms of profit, you see the continued acceleration in a very difficult region where we have very strong brands and our ability to execute pricing in that P&L. And importantly, in the second quarter, we returned to volume growth in Latin America as well, which is terrific to see.
Winning on the ground in Latin America, there is a lot of things in terms of the capabilities that we bring to the table. But ultimately, it’s about executing on the ground and doing things that really drive market shares and ultimately volume growth in that business. You can see some of the execution that we are back to really getting focus behind in terms of driving and accelerating some of our innovation and some of our brand equities across that division. We are confident in our growth as we look towards the back half of this year and that growth will continue. Couple of reasons for that. It’s really the composition of our portfolio. Our portfolio is everyday usage products by and large. People buy them every single day. We offer a very flexible portfolio across multiple price tiers. We will see our opportunity continue to grow in the premium segment, but we also have strong businesses in the mid-price in the value segment, which allow us to capture the economic needs of consumers all over the world.
No private label penetration by and large, in most of our categories, particularly oral care, and obviously, we are supporting all of our brands with increased advertising and robust innovation through the back half of this year and into 2024. And importantly, we continue in some of the categories to drive that high brand loyalty with some of the science-based innovation that we bring to the market, which allows us to earn the respect of our professional partners and drive endorsement and recommendations there.
Let me talk about leveraging our capabilities. As I mentioned earlier, we have talked about for the last 1.5 years building capabilities, new capabilities for the company moving forward. We are now really scaling these capabilities across the organization. I talked about five in the past, I’ll focus today on three, which is our science-led core innovation getting some of our core businesses back to growth and the opportunities that we see in the premium segment, how we are taking advertising and truly driving efficiency through the P&L and selecting how we buy our media very differently than we have in the past and very importantly, through the inflationary period that we have had, our revenue growth management principles have certainly allowed us to deliver consistent pricing. But more importantly, I think this revenue growth management discipline that we have scaled across the organization is going to allow us to continue to find pricing opportunities as we move forward throughout this year and next.
So, let’s talk about our innovation process. It really starts at Colgate with science. It’s a cultural aspect to how we think about our business and how we plan the breakthrough in the transformational innovation. It really is a discipline and a rigor that’s required across the organization. It’s not just hiring a lot of scientists. It’s really thinking through the insights required to ensure that our scientists are focused on the opportunities that we see for growth across the world. You can see some of the great process that we put in place in terms of patents and ultimately delivering more publications in the market that garner us the respect and credibility that we have and give us the proof points that we use in our advertising.
But more importantly is how do we take that science and transfer it into real people-centric innovation. And I think the real difference is that we have reorganized the organization much more around breakthrough and transformational innovation. We were very reliant on line extensions in the past that wasn’t giving our scientists ability to develop breakthrough ideas, wasn’t giving our marketers the ideas to transform and disrupt categories. And we redesigned the organization around breakthrough and transformational. Likewise, to ensure that we embed that across the organization, we have redesigned our incentive structure as well. So, teams are focused on only not the amount of innovation, which is the scale of it, but the incrementality of the innovation at the same time. So that drives incremental value for us and our retail partners. And you can see some of the success we are having with increased breakthrough in transformational, which we define as H2 and H3 inhibition setup for ‘24 and ‘25 versus where we were in ‘21.
Depiction of that is the U.S. Here is our chair to sink strategy so to speak which takes the early entry price points in the Whitening segment, where we bring consumers into the Whitening segment with some of our superior technologies. You see that on the left with our toothpaste and toothbrush at the $4 to $10 price points. And then we are gradually trading them up based on efficacy as they move through on the continuum to the right there. You see our whitening pens that we have launched, which are incremental consumption opportunities for us as we have expanded into that segment both at the $20 to $25 price point. And moving to the right, you see the price points get higher and higher as we deliver more efficacy into the segment that ultimately with the take-home product that we sell through our professional partners for $350.
Lots of markets we can’t use hydrogen product side, which is novel ingredient that we have pioneered over the last 5 to 6 years in the Whitening segment. It’s not allowed in certain percentages, in certain markets around the world or not even allowed to be used. So we have developed new technology that continued to provide superior whitening and efficacy in those markets. And since 2022, we have now launched it in 52 markets which is our NPS technology. And clearly, that’s driving great success for us in the Whitening segment around the world. Let me run a spot on some of our Whitening advertising that’s going on around the world.
[Video Presentation]
Noel Wallace
This focused effort behind whitening around the world is allowing us to drive incremental share in a very rapidly growing segment. You can see some of the great performance we have had here in the top 8 markets where we basically executed the full spectrum of that innovation. And ultimately, this is driving our global market share. You can see our global market share with quite a nice inflection point relative to where we have been historically now back at end of the 41% approaching the 42% range, which is just perfect for the franchise. It’s not just right we have targeted in driving that share. It’s ultimately other segments. We are really leveraging our portfolio differently over the last 2 years, where we historically have been very focused on the Colgate equity. We have found that some of our high-end therapeutic brands that European brands like elmex here on the screen, there is unique opportunities to drive into new segments and new channels that we were otherwise competing as effectively.
Great example of that is the pharmacy launch of elmex in Brazil. You can see the graph there in the middle that our business is up 75% in the last couple of years year-to-date, but we’ve obviously launched it a couple of years ago where the Sensitivity segment is up 14% and we are the fastest growing brand in the Pharmacy segment of Sensitivity in Brazil, which again is a terrific accomplishment given some of the entrenched competitors and the challenge of launching a new brand in a market like that, but it’s been a great success for us.
Others are partnerships that we’re thinking about very differently. We are trying to drive category growth in new segments and our partnership with Philips is a great example of that. We partnered with them in Brazil and Mexico and developing the category very much in the bionic stages where the penetration is very low and working with our trade partners to accelerate category growth and get the market to convert over ultimately to a more of an electric toothbrush market and partnership with Philips. You can see some of the great success we’ve had there with some of the points on the chart.
Likewise, moving into adjacent segments. In our Sunscreen segment, EltaMD, as you know, is the number one brand recommended for dermatologists by dermatologists here in North America. We’ve expanded into new forms, sprays and sticks and you can see some of the great ratings and reviews that we’re getting, just one of them there at the bottom, which is a five-star review. Again, the unique use of this product is a cosmetic elegance it brings to the Sunscreen market. It’s a very, very unique formulation which is really the heritage of Elta and why they were successful getting derm recommendations because the efficacy was tremendous in addition to the cosmetic elegance in terms of application, and that’s delivered through two new forms that we’ve introduced in the market as well and our best anti-aging sunscreen – excuse me, anti-aging serum that you see here on the chart of Pro-Max launch, which has been terrific so far out the door. And for those of you that are into the anti-aging, it’s a wonderful product to try. I’m not sure it’s in the basket this year as it’s not invested. It’s a 250 retail, so it’s probably one of the reasons why we didn’t include it. But it’s a terrific product and I encourage you all to give it a shot.
Moving on to more mainstream product as Sanex, a big brand force in Europe, where we’ve launched the prebiotic concept into the market there with our advanced skincare technology. Let me run the ad because I think the ad brings it to life in a special way and very concise.
[Video Presentation]
Noel Wallace
I am moving on to Hills. 75-year anniversary of the launch of KB which was the initial prescription, a nice formula that came into the market launched by [indiscernible] just over 35 years ago. We’ve continued to upgrade that, obviously, with some of our relaunch. Our vision is obviously improving better health of our microbiome technology. And likewise, for kidney performance, improving kidney performance and the [indiscernible] kidney we launched a terrific breakthrough formula here that we think is going to continue to accelerate our prescription side of business. In 2021, we announced a significant capital strategy change for Hill’s relative to our ability to run all the fastest growing part of the Pet Nutrition segment and the pet market in terms of ownership, and we wanted to hear we had technology in place for the foreseeable future to deliver on where we see consumer trends going.
One of the first launches we’re going to have in the market as a result of that is our small oral care, small and many. We had significant oral care benefits in our current technology into pet food, but it wasn’t significant enough in terms of efficacy for small pets, where we designed to [indiscernible] completely small pets in order to allow the toothbrush effectively and remove unnecessary plaque in dogs and cats mouths and you see some of the benefits that demonstrated here in the package and how we will execute that market expected about some of the execution there.
Moving on to Home Care. We will be disrupting the Fabric Softener category and our number one market, France, where we have the number one market position with Soupline. This is a solid or a unit dose technology. So moving away from liquid transporting liquid across countries and obviously, the significant costing to come with that. We are finally delivered real efficacy through a soft solid. This has been a challenge for us for many, many years. And we now have something that we think is going to be a terrific breakthrough for that market and off to a pretty good start already in a very competitive market like France.
And here in the U.S., moving more in the sustainability field, making sure that we can continue to deliver enhanced efficacy while improving the environmental footprint of this product. We’re concentrating our Fabuloso which allows us to use a far less plastic to deliver enhanced efficacy as we move with that product moving forward off to a great start so far. Maybe run the ad for you.
[Video Presentation]
A little history on this brand and advertising, it was established in Latin America, it’s the number one leader in Latin America and it’s been an extraordinarily successful equity in terms of how we managed it very, very consistently for over 15 to 20 years, and we brought that into the Fabuloso into U.S. I think probably about 10 to 15 years ago, and it’s continued to grow year in, year out. Obviously, a strong Hispanic heritage, but now we’re growing very much across the general market. And you can see the consistency of execution in terms of the freedom and the fun nature of the brand and certainly well executed in the advertising that we’re using.
Okay, let me move on to advertising. You’ve clearly seen that we’ve elevated our focus on advertising in terms of driving brand health, obviously, delivering the pricing that we have in the market and ultimately accelerating sequential volume growth as we move forward through the back half of this year. And you can see, obviously, the acceleration of the advertising. They’re just not getting advertising to sales up we need to improve the quality of our advertising and ultimately how we buy. So we’ve embarked on a lot of work. Yves talked about it back at CAGNY. In terms of marketing mix modeling, which is how we buy our media and what we decide to spend on media on. We historically were only using marketing mix in some of our key core markets around the world. We’re now up to about 60% of our media spend captured through marketing mix, which allows us to be much more intelligent about where we spend our money, and you can see the ROI that we tend to be getting from that, which is terrific. And then it’s ultimately about how we buy our media around the world.
It would be significant digital transformation occurring in our company and around the world, we really elevated our focus on digital techniques to make sure that we’re securing and buying more efficiently around the world and then ultimately scaling that efficiency in a more effective way. You can see that we’re now in 63 markets with programmatic media, which allows us to be much more targeted and efficient in how we buy our media and ultimately, the more we do in programmatic, the more we can sell some of the learnings of that benefit around the world. It’s not just how we buy and where we buy, but it’s ultimately the content and how we deliver great insights into the market to capture consumers’ attention. And you talked about that a little bit back in CAGNY as well. But over the last year, we have spent considerable amount of time and investment in training and developing our people to develop better insights in terms of what they claim from behaviors in the market and translating those into concepts in advertising that can be executed more effectively around the world.
And you see some of the work that we’ve done there. And ultimately, we’re getting much more analytical and programmatic in how we think about the media ability to iterate as we see the effectiveness of that spot on air, we can change life. In my time ultimately how we think about updating claims and opportunities to create more persuasive advertising, which has been driven. As we reach the brand health and all of our reflection in brand health is ultimately your brand penetration. As you know, Colgate according to Kantar is the number one most penetrated brand in the world. We’re in 700 million households which is the highest penetration of any brand in the world. We’re also the number one most chosen brand in the global health and beauty and the number three most valuable brand in personal care, all of that advertising work and innovation clearly looking to demonstrate improved brand health and ultimately, improved usage of our products around the world.
And coming back to Latin America, obviously, a brand – excuse me, a market where consumers have a lot of choice and disposable income is precious to consumers and ultimately, what brands they choose is a reflection of their loyalty and commitment to the franchise. And you can see in Latin America, amongst all brands that compete in CPG there. We’re the number two most chosen brand, which, again, is something that we’re very, very proud of.
Okay. Moving on to revenue growth management and obviously an important point given the inflationary pressures that we saw over the last year and likewise will be an important point as we look to continue to find pricing opportunities in the foreseeable future. We spend a lot of time not only embedding the discipline across the organization and the techniques, but not really automating it and finding tools and technologies to make sure that we drive the efficiency throughout the system and allow our teams on the ground to make more educated decisions and find pockets of opportunities within their P&Ls to drive more pricing and category growth for their customers.
And you can see across the points here, a lot of really interesting ways that we’re looking to embed and scale this unique technology that we have in terms of proprietary RGM analytics around the world and making sure that our teams are effectively trained and developed against that. That’s allowed us to continue to develop consistent strong pricing. In the second quarter, again, 11% comping 8.5% last year, again, I think a reflection of the revenue growth management principles that we have in place. It’s not just taking this pricing. You have to get very creative these days to think about opportunities to drive real value to consumers and to our retailers in terms of your ability to take pricing in the category.
Okay. Moving on to, I think, an important inflection point for the company, which is how do we drive more leverage to the P&L. We have done a terrific job getting organic sales growth. We have done a terrific job getting net sales accelerated through the P&L. Now we need to find ways to drive more leverage and monetize that more effectively. So, I want to talk a little bit about how we are driving leverage through the P&L. Part of that was our GPI, which we announced in early 2022. We saw this start to come through in the back half of ‘22 and we will see that continue to unfold as we move through the balance of this year, more operating leverage to the P&L. Our overheads, we need to come down. So, it really focused on cost containment within the P&L. This obviously includes logistics, as I mentioned earlier, which is in our SG&A line and our overhead line you can see the great progress we made in that area to drive more leverage through the P&L. Okay. Accelerate free cash flow, ultimately how we look at our capital structure and ultimately opportunities to invest for future growth and return shareholder value. Cash flow was at 59%, as I have mentioned earlier in the second quarter. This is a big focus towards [Technical Difficulty] it was just not only cash income coming through the P&L, but it was also a great discipline behind working capital. Stan Sutula, our new CFO, he has done a tremendous job, reoriented the organization and finding new ways to continue to reduce working capital, and our free cash flow, as I mentioned earlier, was up 81%. Part of this money investing back in the business, we have obviously accelerated growth opportunities in terms of our capital expenditures. About half of that $3.9 million is against clear growth opportunities that we see in terms of building capacity for our plants around the world. Part of that was obviously the Hill’s business and some of the capacity expansion that we have had in that over the last couple of years. Here is the congesting statement [ph] of Hill’s. This will open up at the end of this quarter. It will be our most advanced and automated plant in the world for Hill’s. This would be a wet pet food plant. This is a segment that continues to grow around the world and in indexing the segment that we are under-indexed in because we didn’t have the capacity. So, this will unlock further growth for us to continue to innovate in a very important new segment, which is wet food. In all three, as we invest behind the business, we also returned money to our shareholders. We are very proud of the fact that we paid a dividend for 128 years. For 60 years, we have obviously increased that dividend and we have returned over $28 billion to our shareholders over the last 10 years. So, in summary, I think the key message I would like to leave you with is, obviously, the quality of our P&L is in the shape that’s giving us a lot more flexibility than how we think about the business. Consistent top line growth moving through the P&L, gross margins and operating margins moving in the right direction, while we are continuing to invest behind the business to drive growth and brand health support our innovation and return to sequential volume growth as we look in the back half of this year. And also I mean that’s going to allow us to continue to deliver on an earnings per share projections that we provided to you and ultimately leveraging our balance sheet on the way to continue investment growth for the business in the long-term. So, with that, I will turn it over to you Lauren.
Question-and-Answer Session
Q - Lauren Lieberman
We have a little bit less than 10 minutes to consolidate my questions a bit. So, the market is obviously focused on the return to volume growth for the entire industry. So, with that major comparisons, I know you have spent a lot of time talking about the increase in advertising, you talked about innovation. So, kind of how should we think about the progression of volume performance in aggregate to the company? And when can we expect to see volumes in…?
Noel Wallace
Yes. I think if you go back and look at the second quarter, which I think demonstrated our confidence in where the business is headed. Two divisions I would first point out would be Latin America and Africa, Eurasia. We took aggressive pricing in both of those divisions over the last couple of years. And both those divisions return to volume growth in the second quarter. And what that clearly indicates is that over time, the elasticity lessens as consumers get adjusted to new pricing as competitors catch up to your pricing that you have demonstrated in the marketplace. The market kind of levels out and consumers get back to looking at how they want to buy more effectively and hopefully perhaps restocking their pantries, which historically is the reason we see volumes come down in the categories. We saw and we have seen a little bit of trade down, but ultimately, as we bring more innovation and more advertising into the market, that allows you to consistently build your brands and protect them for further trade down moving forward and hopefully allows you to drive volume in the long-term. Getting our promotional cadence right, obviously some of the markets will be key for that as well. And we talked about North America on the call, and we may have overcorrected a bit in terms of that opportunity as we see that cadence come back over the next six months. We will see volumes start to come back sequentially nicely in that market, so that will be an important part. And ultimately, as we see our ability to continue to optimize our supply chain and make sure that we have the ability to put products where they need or needed most and do that in an efficient way, we will see volume come back through that as well. So, we have a multitude of different mechanisms in the P&L right now in order to generate that volume, but we want to be constructive with that. I have mentioned very clearly on the call of getting gross margin and profit back into the P&L and getting that leverage through the P&L, so we can continue to sustain the advertising is critically important, but we fully are focused on getting volume back where we see the platform opportunity to do that.
Lauren Lieberman
Okay. Great. And I mean the focus for a bit in North America has obviously been a topic you have been very clear, pulled back a little bit too far in promotion this summer, maybe went too far in some spots, but definitely direction of travel is to want to make promotion out of the market. I guess maybe if you could talk through Oral Care versus the other parts of the business in North America in particular because I think we all sort of talk about North America, but we see how we are only really talking about Oral Care. So, maybe you think about promotional cadence and sort of course cracking a bit in North America, how that differs across the category a little bit.
Noel Wallace
Sure. When we talk about Home Care and Personal Care category, those are categories that we have strong brands, but lower margin positions than we have in Oral care. And if you take the inflationary environment that we experienced in ‘22, it was far more acute in our Home Care and Personal Care brands. So, the need to get margins back on those businesses were critically important, so we can reinvest in terms of some of the innovation that we saw. So, there, we took another sharper approach to where we were pulling back to promotion because they were just getting more unprofitable given the inflationary costs that we saw moving through the P&L last year. And those businesses suffered quite a bit in terms of the promotional allocation and our ability to get the futures in displays. So, as we look at that increased advertising that we put back into North America, that will allow us to get more feature and display as we move through the back half of this year and we will get our price points sharper to ensure we get that. Part of the problem on those Home Care businesses and personal care businesses is we did leave some pricing in some of those categories and it took time for our competitors to follow. We have seen those competitors now followed that will improve the last season, we move through the back half of this year as well. So, we feel good about that. Oral Care, obviously, we have a lot more flexibility in our P&L. We are really trying to drive that category with innovation and pricing, and we have successfully done that. Our non-promoted business continues to really perform exceptionally well and that demonstrates that the advertising is working. We did put away for some very aggressive couponing that was occurring in the market that we decided not to pursue and not to follow. Our competition has not hold back on that couponing, we are now making sure that the back half that we remain competitive, and we will get the promotion application right.
Lauren Lieberman
Okay, great. On the Oral Care business, in particular, in North America, I was actually curious if you can talk about the sharp promotions. Is it or has it historically been different between like the base business versus the more premium areas and whitening as you were highlighting, is that also another area of adjustment maybe on the premium versus base business?
Noel Wallace
Historically, we have under-indexed on the premium segment in North America, and that’s been a big focus of our whitening strategy, and that share continues to perform very well. We had more promotions were in some of our base premium brands like Colgate Total, and we pulled back on some growth and the base business actually continues to perform pretty well and we have got a strong base business, we are able to execute the promotional price points pretty well. But it was really a Colgate Total to have the biggest hit in terms of where we were in terms of promotional allocation, and we will make sure that we adjust that in the back half, we feel pretty good about where we see the volume progressing.
Lauren Lieberman
Great. Let’s switch gears maybe and talk a bit more about pet. So, just curious of how you are going about the pet category broadly. And I think is there a difference in terms of category performance in terms of what we can all see in the Fdn track channels and where the Hill’s business participates.
Noel Wallace
Yes. Overall, it’s still a wonderful category growing both in volume and in dollars as a category, although the volume has come back down a little bit. As I have mentioned on the call, but it clearly continues to be a key growth driver for specialties. If you hear some of the retailers announced – obviously, some of the discretionary categories have moved to specialty have come down, but nutrition continues to be a real differentiator for our pet specialty partners and plays an incredible important role in that regard. Where we see the business evolving over time as we will continue to upgrade, obviously our performance in new segments with that being a clear opportunity for growth, we have seen some conversion in pet specialty from wet to dry, as you have heard, Chewy talked a little bit about that on their call. Obviously, that bodes well given our strength and also we continue to have a real upside opportunity to drive penetration in the wet segment where we have very little shares and will allow us to unlock some of that. And I think what’s interesting now is that the amount of advertising that we are pretty behind this business. And again remember, in most of our markets around the world, were low to mid-single digit market shares. Women in North America, which is our strongest market, we are mid-single digit market share. So, we still have a significant upside to drive penetration on that brand. And the last thing I would say at specialty the little more insulated than we would have in food drug mass. I mean people who had volume in pet specialty are looking for high-end premium efficacious health brands where it has clearly placed the brand as you saw, clearly distinguishes itself with its incredible vet endorsement and our need to make sure we have a strong prescription diet business, which when the vet recommends prescription diet you tend to be very granular to making sure you get the compliance and the efficacy of the pet. And that tends to buffer you a bit from the price trade down that you see going on in food drug mass.
Lauren Lieberman
Okay. And also in terms of pet adoption, it just sounds like the tailwinds that are specific to the Hill’s brand and your business kind of separate you from really worrying too much about pet adoption or new product…
Noel Wallace
I mean there was so much pet adoption over the last couple of years, that will continue to pay out perpetuity, right. I mean those pets necessarily aren’t going away and they need new products. And we continue to grow market share, specifically in pet specific important aspect and important KPI for us to look at where we are today. And as you know, we do not complete food drug mass. And so that’s a very selective distribution strategy for the brand and it’s the right way [ph] for the price promotions that go on there.
Lauren Lieberman
Great. Okay. And we will go to break out, but please join me in thanking Noel and John for being here.
Noel Wallace
Thanks.
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Colgate-Palmolive Company (CL) Presents at Barclays Global Consumer Staples Conference (Transcript)