SHARE TAKES A DIVE
Combined U.S. market share for Colgate's Fab, Ajax, Fresh Start and liquid Dynamo brands has fallen from the mid-teens in the late 1980s to less than 5% of the $4 billion category.
"The very fact that we are going to outsource our detergents is not unusual in the industry, and other people who have big positions in other categories are outsourcing products as well," a Colgate spokesman said. In a letter to retailers, Colgate noted Procter & Gamble's Crest Complete toothpaste and Cascade automatic dishwashing liquid and Unilever's Sunlight are outsourced.
Colgate has "declining volume, increased competition from P&G and no real outlook that things are going to get better," said William Steele, analyst with Dean Witter Reynolds, San Francisco. Outsourcing "still enables them to keep the brand alive."
"You sometimes wonder why [Colgate] is in laundry detergent anymore at all," said Paul Kelly, president of Silvermine Consulting Group, Westport, Conn. But Colgate still has strong detergent sales globally, he said, and the category is too crucial to domestic retailers for Colgate to quit.
MARKETING SUPPORT COULD GROW
Outsourcing manufacturing could help Colgate free funds to boost marketing support through ad agency FCB/Leber Katz Partners, New York, and may even provide an edge against P&G, said Burt Flickinger, a consultant with Price Waterhouse & Co.
Colgate's new manufacturer, said by several industry sources to be Huish Detergents, should provide state-of-the-art technology, Mr. Flickinger said, while P&G will have to spend money in coming years to upgrade manufacturing facilities.
P&G has built its U.S. laundry detergent share to 58%, taking share from all major competitors in the past year, Mr. Steele said.
Laundry detergent is one area where P&G has remained aggressive in couponing, Mr. Flickinger said, adding that P&G concentrated heavily on co-marketing in detergents.
Ranked by dollar market
shares, powdered and liquid
Company 1995 Change
Procter & Gamble 58.0% +1.7
Unilever 19.5% -1.0
Dial 6.6% -0.6
Colgate 4.5% -0.1
Church & Dwight 4.0% -0.3
Private label 2.9% -0.3
Others 4.1% +0.3
Notes: Share figures are through mid-August. Change is in share points vs. full-year 1994. Source: Dean Witter Reynolds