NEW YORK (AdAge.com) -- Colgate-Palmolive co. has made a small fortune the past decade bringing its popular Suavitel fabric softener and Fabuloso household-cleaner brands from Mexico into the U.S. and letting them thrive largely off equity built in a smaller, cheaper media market.
Now, the company is putting that strategy to the acid test in one of the most hotly contested markets in U.S. package goods -- mass hair care -- as it began importing Palmolive Caprice shampoo and conditioner from Mexico to the U.S. last month.
The idea of a shampoo named after what's best known as dish soap may seem incongruous to many consumers. But Palmolive has a distant heritage in the U.S. as a shampoo brand in the early 20th century, and a far more recent heritage for many consumers of Latin, Asian or even European descent.
One person familiar with the matter said Palmolive ranks behind only Procter & Gamble Co.'s Pantene as a global shampoo-conditioner brand outside the U.S. Such claims are hard to quantify, particular as P&G claims its own Head & Shoulders is the world's No. 2 shampoo, and there are other strong global hair-care brands including L'Oréal's eponymous brand and Garnier and Unilever's Sunsilk/Sedal range.
But regardless of rank, Palmolive shampoo, which goes by various sub-brands overseas, is a major player in Mexico, India, Germany and Thailand.
In this country, Palmolive Caprice shampoo and conditioner already have two big things going for them: They appeal to the fastest-growing segment of U.S. consumers, Hispanics, a demographic that happens to spend more than other segments on hair-care products. And they have one big retail buyer already -- Walmart -- which has put the brand in stores serving predominantly Hispanic populations throughout the U.S. as part of an effort several suppliers have noted to increase its offerings of Hispanic products.
Colgate also was seeking other chain-drug players to add the brand to their lineups earlier this month at the National Association of Chain Drug Stores Marketplace convention in San Diego.
Palmolive Caprice was already on many U.S. supermarket and drug store shelves in the form of product diverted from Mexico. Now, Colgate is shipping the products directly, and, if they do well enough, may further tailor the brand for the U.S. and take it more upscale, said a person familiar with the plans.
But Colgate may not have to spend much to make Palmolive Caprice a significant player if history is any guide. Since their formal entry in 1997, Suavitel and Fabuloso have attained 12% and 7% market shares in their respective categories, according to data from Symphony IRI for the 52 weeks ended May 16.
Colgate has eyed U.S. hair care for years but was wary battling players with much deeper pockets under former Chairman-CEO Reuben Mark. Global personal-care consultant Colin Hession believes current Chairman-CEO Ian Cook is making the play because it's among the company's few remaining areas of "white space" in global competition. Still, he's doubtful of the prospects. "For them to compete in the rough, tough center of mass shampoo with the Suaves of this world and VO5 is absolute death, because you need to sell it by the gallon," he said.
But Isabel Valdes, a marketing consultant who focuses on the Hispanic market, sees the move as a big potential winner for Colgate. "I call this the bounty of brand heritage," she said. "If it's a brand you grew up with and liked and you grew up in the United States, if you missed that brand and that brand comes to you, you have a marketing advantage."