COLGATE CONCEDES LAUNDRY BATTLE TO P&G

Will Sell Off Detergent Business; Rolls out New Tooth-Whitener

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CINCINNATI (AdAge.com) -- Colgate-Palmolive Co. today said it will eventually sell its laudry detergent business, conceding victory in the category to Procter & Gamble Co.

In a conference call with analysts, Chairman-CEO Reuben Mark cited P&G's dominance in detergent as making any effort to build share unprofitable. Colgate has a roughly 10% share of the global laundry detergent business, compared to more than 50% for P&G, Mr. Mark said.

Little ad support
Colgate decided in the late 1980s to run the business for profit, he said, "and sell it when we can." Colgate's laundry brands, which includes the Fab and Ajax brands in the U.S., have had little ad support in the U.S. in the past decade.

In the oral care segment, where

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New Tooth-Whitening Kit to Launch in Fall
Colgate and P&G are also fierce competitors, Colgate will launch Simply White Night, a nighttime version of its Simply White tooth whitener, in March, going head-to-head with P&G's Crest Night Effects, a similar brush-on product for nighttime use that hits retail stores in the spring.

Mr. Mark said Simply White, which accounted for about $100 million in wholesale sales in the fourth quarter, still is preferred by consumers to P&G's higher-priced Crest Whitestrips by a 2-to-1 to 3-to-1 margin. But Colgate's dollar share of the U.S. whitening category slipped to 40% overall in the fourth quarter from 50% in its first eight to 10 weeks of distribution, about even with Crest's dollar share, as P&G cut the suggested price of Whitestrips from more than $40 to less than $30.

Consumer behavior
Household penetration for at-home whitening kits in the U.S. is still only 5% to 7%, said Ian Cook, president-North America for Colgate. "The key thing for these products is to fit into consumer behavior," he said. "Using a product at nighttime ... is fitting with consumer behavior, which can increase household penetration rather than cannibalize market share from an existing product."

Simply White Night has a higher concentration of hydrogen peroxide so that a single nighttime use has the same effect as two daytime applications of Simply White, Mr. Cook said. The product is priced under $15, like Simply White and Crest Night Effects.

P&G will back the launch of Crest Night Effects with more than $50 million in marketing support, including ads from Publicis Groupe’s Saatchi & Saatchi, New York. Colgate didn't disclose ad spending plans. WPP Group's Y&R Advertising, New York, handles Colgate brands.

$200 million business
Mr. Mark said he ultimately expects Simply White to be a $100 million to $200 million annual business in the U.S. and that Colgate is expanding the brand into 16 additional countries in Latin America and Europe in 2003.

More broadly, he said Colgate's edge in faster-growing Hispanic and African-American communities should help its overall market share progress in the U.S. Colgate toothpaste share is about 59% among U.S. Hispanics compared with 34% in the general market, he said, while share for Colgate dish detergent is 55% among Hispanics compared with 38% in the general market.

Sales up for quarter
Overall for the fourth quarter, Colgate sales rose 3.9% to $2.4 billion, with net earnings up 20.4% to 59 cents a share. Earnings beat First Call analysts' consensus estimates by a penny.

But pricing and promotion issues ate into both sales and earnings as Colgate fought for share with P&G and others in oral care. Sales were 2.1 percentage points lower than Colgate's 6% unit volume growth because of pricing and promotion, which were particularly intense in North America, where sales rose only 5.5% compared to 10.5% volume growth.

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