WEBVTT 00:00:00.000 --> 00:00:01.760 Welcome back to The Deep Dive, the place where 00:00:01.760 --> 00:00:03.940 we take the vast stack of sources you share with 00:00:03.940 --> 00:00:06.219 us and distill the most critical knowledge into 00:00:06.219 --> 00:00:09.839 actionable insight. And today we are peering 00:00:09.839 --> 00:00:13.980 deep into a company whose presence in your life 00:00:13.980 --> 00:00:16.059 is almost impossible to overstate. It really 00:00:16.059 --> 00:00:18.019 is. Its products, well, they're in every single 00:00:18.019 --> 00:00:19.899 room of your house, the bathroom, the kitchen, 00:00:20.000 --> 00:00:21.960 the laundry room. And definitely the pet corner. 00:00:22.429 --> 00:00:25.870 Exactly. We are talking about the American multinational 00:00:25.870 --> 00:00:29.170 giant Colgate -Palmolive. It is the definition 00:00:29.170 --> 00:00:31.949 of corporate ubiquity. I mean, for so many consumers, 00:00:32.109 --> 00:00:34.909 it just represents fundamental trust and hygiene. 00:00:35.170 --> 00:00:36.929 Right. You hear the name and you immediately 00:00:36.929 --> 00:00:39.990 picture that specific tube of toothpaste. But 00:00:39.990 --> 00:00:42.310 what we're really discussing is an enterprise 00:00:42.310 --> 00:00:45.329 headquartered right in midtown Manhattan that 00:00:45.329 --> 00:00:48.090 spans so far beyond oral care. We're talking 00:00:48.090 --> 00:00:51.200 household goods. personal care and that critically 00:00:51.200 --> 00:00:53.299 important, really high -permission veterinary 00:00:53.299 --> 00:00:56.539 segment. So our mission today is to unpack a 00:00:56.539 --> 00:00:59.240 history that spans, what, two centuries. We want 00:00:59.240 --> 00:01:01.600 to get from William Colgate's simple 19th century 00:01:01.600 --> 00:01:04.299 New York soap and candle factory to the massive 00:01:04.299 --> 00:01:07.159 global corporation it is today. And we really 00:01:07.159 --> 00:01:09.560 need to examine the mechanisms and the decisions 00:01:09.560 --> 00:01:12.700 that allowed this company to become a, what is 00:01:12.700 --> 00:01:16.859 it now, a $20 .1 billion global consumer goods 00:01:16.859 --> 00:01:20.170 leader. And crucially... how that massive scale 00:01:20.170 --> 00:01:22.609 has inevitably brought it under some really intense 00:01:22.609 --> 00:01:24.950 scrutiny for everything from market competition 00:01:24.950 --> 00:01:28.129 to, you know, ethical sourcing and its environmental 00:01:28.129 --> 00:01:30.230 stewardship. To truly appreciate the weight of 00:01:30.230 --> 00:01:32.629 that legacy and the scrutiny, we have to first 00:01:32.629 --> 00:01:34.890 establish the sheer gravity of this entity. I 00:01:34.890 --> 00:01:37.090 mean, Colgate -Baumolove trains publicly on the 00:01:37.090 --> 00:01:39.370 NYSE, and it's a component of both the S &P 100 00:01:39.370 --> 00:01:42.069 and the S &P 500. OK, let's pause right there. 00:01:42.230 --> 00:01:44.329 For our listeners who may not be tracking market 00:01:44.329 --> 00:01:47.459 indices every day, what does... Being an S &P 00:01:47.459 --> 00:01:50.340 500 and even more selectively an S &P 100 component 00:01:50.340 --> 00:01:53.319 actually signify in practical terms. Well, it's 00:01:53.319 --> 00:01:55.579 a huge signifier of stability and investor confidence. 00:01:55.680 --> 00:01:58.019 So inclusion in the S &P 500 means it's one of 00:01:58.019 --> 00:01:59.780 the largest, most stable companies in the U .S. 00:01:59.799 --> 00:02:02.239 It's widely seen as a bellwether for the whole 00:02:02.239 --> 00:02:04.879 economy. And the S &P 100. That means it's considered 00:02:04.879 --> 00:02:07.780 among the elite of the elite, the largest and 00:02:07.780 --> 00:02:09.560 most established companies that often define 00:02:09.560 --> 00:02:13.039 entire investment portfolios. So this isn't a 00:02:13.039 --> 00:02:15.219 niche company. It's an institution. An institution. 00:02:15.520 --> 00:02:19.340 Yeah. And for 2024, they reported U .S. $20 .1 00:02:19.340 --> 00:02:23.620 billion in revenue and, get this, U .S. $4 .27 00:02:23.620 --> 00:02:27.080 billion in operating income. Wow. And they managed 00:02:27.080 --> 00:02:29.860 this whole global empire with approximately 34 00:02:29.860 --> 00:02:33.060 ,000 employees. That operational footprint is 00:02:33.060 --> 00:02:35.300 just immense. That sets the states perfectly. 00:02:35.580 --> 00:02:38.259 Let's jump back in time now to Section 1, the 00:02:38.259 --> 00:02:40.400 foundations of hygiene. We're looking at a history 00:02:40.400 --> 00:02:44.020 of innovation and devotion covering the company's 00:02:44.020 --> 00:02:47.000 genesis from 1806 up to the eve of that great 00:02:47.000 --> 00:02:49.659 merger in 1928. The story begins with William 00:02:49.659 --> 00:02:51.740 Colgate. He was an English immigrant who came 00:02:51.740 --> 00:02:53.599 to the United States and was known as a really 00:02:53.599 --> 00:02:55.759 devout Baptist. And his face wasn't just a footnote, 00:02:55.800 --> 00:02:57.939 was it? Not at all. It was foundational to his 00:02:57.939 --> 00:03:00.180 entire business ethic. So in 1806, he starts 00:03:00.180 --> 00:03:02.080 William Colgate and Company on Dutch Street in 00:03:02.080 --> 00:03:03.759 New York City. And the original product line. 00:03:03.939 --> 00:03:06.500 Yeah. It sounds so antiquated now. It does. It 00:03:06.500 --> 00:03:09.560 was simply starch, soap. And candles. I mean, 00:03:09.580 --> 00:03:12.180 the absolute most basic household necessities 00:03:12.180 --> 00:03:15.139 of that era. What's remarkable to me is how quickly 00:03:15.139 --> 00:03:18.280 an early enterprise like that could be disrupted 00:03:18.280 --> 00:03:22.520 by just personal health. The sources detail this 00:03:22.520 --> 00:03:25.460 major setback in 1833. Yeah. Williams suffered 00:03:25.460 --> 00:03:27.620 a severe heart attack, which was so debilitating 00:03:27.620 --> 00:03:29.599 that he was actually forced to stop all sales 00:03:29.599 --> 00:03:31.900 activity, temporarily at least. And that really 00:03:31.900 --> 00:03:33.979 speaks volumes about the early American business 00:03:33.979 --> 00:03:36.319 landscape, doesn't it? Oh, absolutely. Back then, 00:03:36.340 --> 00:03:38.520 the entire operation was intrinsically linked 00:03:38.520 --> 00:03:41.280 to the health and the life of the founder. So 00:03:41.280 --> 00:03:43.400 if the founder went down, the business just ground 00:03:43.400 --> 00:03:46.599 to a halt. But he recovered. He did. After his 00:03:46.599 --> 00:03:48.719 convalescence, he just picked up right where 00:03:48.719 --> 00:03:50.539 he left off, that early resilience. You know, 00:03:50.560 --> 00:03:53.860 it's truly part of the brand's DNA. But William 00:03:53.860 --> 00:03:56.680 Colgate didn't just focus on survival. I was 00:03:56.680 --> 00:03:59.580 focused on quality standardization in an era 00:03:59.580 --> 00:04:02.400 that was defined by inconsistency. Right. Sometime 00:04:02.400 --> 00:04:04.979 in the 1840s, the company initiated a really 00:04:04.979 --> 00:04:08.180 key process, selling individual cakes of soap 00:04:08.180 --> 00:04:11.360 in uniform, specific weights. And that's a point 00:04:11.360 --> 00:04:14.080 of huge strategic significance that probably 00:04:14.080 --> 00:04:15.919 gets overlooked in a lot of historical summaries. 00:04:16.040 --> 00:04:18.959 It absolutely does. Before this, you know, soap 00:04:18.959 --> 00:04:21.220 was often just sold by the slice or cut from 00:04:21.220 --> 00:04:23.300 a larger block. So that led to... varying quality, 00:04:23.579 --> 00:04:25.680 varying size. You never knew what you were getting. 00:04:25.800 --> 00:04:28.600 Exactly. By introducing uniform weights, William 00:04:28.600 --> 00:04:30.740 Colgate was establishing one of the earliest 00:04:30.740 --> 00:04:33.579 forms of modern mass market branding and consumer 00:04:33.579 --> 00:04:36.459 trust. The customer knew precisely what they 00:04:36.459 --> 00:04:38.939 were getting every single time. This set the 00:04:38.939 --> 00:04:41.439 standard for that predictable, reliable quality 00:04:41.439 --> 00:04:43.899 that you and I just expect from consumer brands 00:04:43.899 --> 00:04:47.639 today. So William passes away in 1857 and the 00:04:47.639 --> 00:04:50.360 leadership transitions to his son, Samuel Colgate. 00:04:50.970 --> 00:04:53.750 The company is reorganized as Colgate & Company. 00:04:53.949 --> 00:04:56.689 Yes, and the sources reveal that Samuel initially 00:04:56.689 --> 00:04:59.629 resisted taking over the business. Really? Yeah. 00:04:59.709 --> 00:05:01.990 The narrative suggests it wasn't a straightforward 00:05:01.990 --> 00:05:05.089 financial succession. Samuel, just like his father, 00:05:05.189 --> 00:05:08.370 was a devout Baptist, and he felt this moral, 00:05:08.529 --> 00:05:11.170 almost a fiduciary obligation to continue the 00:05:11.170 --> 00:05:13.610 family enterprise. So it was a philosophy rooted 00:05:13.610 --> 00:05:16.750 not just in profit, but in stewardship and, I 00:05:16.750 --> 00:05:20.389 guess, the provision of... necessary goods. Precisely. 00:05:20.389 --> 00:05:23.550 And under Samuel, they began this crucial shift, 00:05:23.750 --> 00:05:26.509 moving away from just basic necessities and towards 00:05:26.509 --> 00:05:30.589 personal care. So in 1872, they introduced cashmere 00:05:30.589 --> 00:05:33.430 bouquet. A perfume soap. This was a move into 00:05:33.430 --> 00:05:36.050 the realm of, you could say, affordable luxury. 00:05:36.129 --> 00:05:38.910 It signaled their expansion beyond the laundry 00:05:38.910 --> 00:05:41.370 room and into the personal hygiene cabinet. And 00:05:41.370 --> 00:05:44.490 that move set the stage for the true game changer. 00:05:45.069 --> 00:05:48.529 Dental hygiene. It did. In 1873, they introduced 00:05:48.529 --> 00:05:51.350 their first Colgate toothpaste. It was an aromatic 00:05:51.350 --> 00:05:54.029 paste and it was sold in these little glass jars. 00:05:54.170 --> 00:05:56.629 But that jar format, while it was an innovation, 00:05:56.910 --> 00:05:58.949 was really just a transitional step. Because 00:05:58.949 --> 00:06:01.050 the format change that defined the entire industry 00:06:01.050 --> 00:06:04.129 happened in 1896. Exactly. This is when Colgate 00:06:04.129 --> 00:06:06.509 began selling the first toothpaste in a flexible 00:06:06.509 --> 00:06:09.750 tube. They branded it Colgate Wibben Bental Cream. 00:06:09.930 --> 00:06:11.910 But they didn't invent the tube itself, did they? 00:06:12.220 --> 00:06:14.699 No. Credit for inventing the actual toothpaste 00:06:14.699 --> 00:06:17.259 tube package belongs to a dentist, Washington 00:06:17.259 --> 00:06:20.160 Sheffield. But Colgate. Yeah. Colgate recognized 00:06:20.160 --> 00:06:22.879 the format as the future and they commercialized 00:06:22.879 --> 00:06:26.100 it masterfully. So that shift from, you know, 00:06:26.100 --> 00:06:30.279 an unsanitary kind of messy jar to a clean, convenient, 00:06:30.439 --> 00:06:33.180 collapsible tube, that fundamentally changed 00:06:33.180 --> 00:06:35.730 how people approach their daily oral care. It 00:06:35.730 --> 00:06:37.829 elevated the product experience overnight. It 00:06:37.829 --> 00:06:40.889 made it modern. And that same pivotal year, 1896, 00:06:41.089 --> 00:06:43.410 also saw a commitment to science that, frankly, 00:06:43.569 --> 00:06:46.509 few of their competitors matched. Yes. They established 00:06:46.509 --> 00:06:49.490 one of the very first applied research labs directed 00:06:49.490 --> 00:06:51.970 by a man named Martin Itner. And that decision 00:06:51.970 --> 00:06:54.589 was crucial. Absolutely. It meant they weren't 00:06:54.589 --> 00:06:56.610 just marketers of commodities anymore. They were 00:06:56.610 --> 00:06:58.790 becoming developers of science -backed hygiene 00:06:58.790 --> 00:07:01.949 solutions. This R &D foundation is what allowed 00:07:01.949 --> 00:07:04.209 them to later navigate all the complex challenges 00:07:04.209 --> 00:07:07.550 of ingredients. And it paid off quickly. It did. 00:07:07.689 --> 00:07:10.329 They initiated mass sales of the toothpaste in 00:07:10.329 --> 00:07:13.949 tubes by 1908, securing an early and really dominant 00:07:13.949 --> 00:07:16.589 position in the dental market. But, as you pointed 00:07:16.589 --> 00:07:19.029 out, the name is Colgate -Palmolive. Where does 00:07:19.029 --> 00:07:21.120 that second half of the name come from? So that's 00:07:21.120 --> 00:07:23.339 the parallel story, and it originates in Milwaukee, 00:07:23.639 --> 00:07:25.939 Wisconsin, with the B .J. Johnson Company. Okay. 00:07:26.079 --> 00:07:29.660 In 1898, they formulated a highly successful 00:07:29.660 --> 00:07:32.600 soap that was derived specifically from palm 00:07:32.600 --> 00:07:36.399 oil and olive oil. Palm olive. Palm olive. The 00:07:36.399 --> 00:07:38.680 name was both descriptive and just incredibly 00:07:38.680 --> 00:07:40.839 effective. And that product's popularity was 00:07:40.839 --> 00:07:43.800 so immense that it led the company to fully rename 00:07:43.800 --> 00:07:47.500 itself. Palmolive in 1917, right? They just shed 00:07:47.500 --> 00:07:49.759 the founder's name entirely. Correct. The Palmolive 00:07:49.759 --> 00:07:51.740 brand was a sensation. I mean, by the start of 00:07:51.740 --> 00:07:53.819 the 20th century, Palmolive was officially the 00:07:53.819 --> 00:07:56.519 world's best -selling soap. Wow. So as we're 00:07:56.519 --> 00:07:58.680 approaching the 1920s, you have the traditional 00:07:58.680 --> 00:08:01.439 science -backed Colgate on one side, the consumer 00:08:01.439 --> 00:08:04.240 sensation Palmolive on the other, and a third 00:08:04.240 --> 00:08:06.699 major player in the field, the Peet Brothers 00:08:06.699 --> 00:08:08.759 Soap Company. The time was ripe for consolidation. 00:08:09.100 --> 00:08:11.800 Absolutely. Which brings us directly to section 00:08:11.800 --> 00:08:14.790 two. consolidation and the birth of a consumer 00:08:14.790 --> 00:08:17.449 giant. This covers the period from that merger 00:08:17.449 --> 00:08:21.149 in 1928 right through the 1980s. And this isn't 00:08:21.149 --> 00:08:25.009 just a merger. This is the creation of a I mean, 00:08:25.029 --> 00:08:27.290 a near -monopoly player in the hygiene space. 00:08:27.589 --> 00:08:29.689 It was a tremendous corporate maneuver. It happened 00:08:29.689 --> 00:08:33.970 in June 1928. The deal combined Colgate, Palmolive, 00:08:33.990 --> 00:08:36.169 and the Peet Brothers Soap Company. And the latter 00:08:36.169 --> 00:08:38.590 had actually already merged into Palmolive two 00:08:38.590 --> 00:08:40.809 years earlier. So this consolidation instantly 00:08:40.809 --> 00:08:42.870 created the largest soap and perfumery company 00:08:42.870 --> 00:08:45.529 in the entire United States. Yes. It linked that 00:08:45.529 --> 00:08:48.049 established tradition with massive market penetration. 00:08:48.370 --> 00:08:49.769 And if we look at the financial weight before 00:08:49.769 --> 00:08:52.730 the merger. The scale is just astonishing for 00:08:52.730 --> 00:08:55.889 the time. Yeah. Pre -emerger sales in 1927 exceeded 00:08:55.889 --> 00:08:58.610 $100 million. Right. And in today's valuation, 00:08:58.929 --> 00:09:01.690 we are talking about well over $1 .83 billion 00:09:01.690 --> 00:09:05.450 in revenue in 2024 dollars. That is a behemoth 00:09:05.450 --> 00:09:07.850 being created. It was. The combined entity was 00:09:07.850 --> 00:09:10.070 christened the Colgate Palmolive Peat Company. 00:09:10.600 --> 00:09:12.320 And it was designed to be international from 00:09:12.320 --> 00:09:15.059 day one. It was operating seven U .S. manufacturing 00:09:15.059 --> 00:09:18.120 facilities and already had factories established 00:09:18.120 --> 00:09:20.840 in 14 foreign countries. They streamlined the 00:09:20.840 --> 00:09:23.679 name in 1953, officially becoming the Colgate 00:09:23.679 --> 00:09:26.039 -Palmolive Company, the name we all know today. 00:09:26.480 --> 00:09:28.779 But what immediately followed that consolidation 00:09:28.779 --> 00:09:32.539 was an intense, perpetual battle for market dominance 00:09:32.539 --> 00:09:35.929 against another giant. Indeed. The longstanding 00:09:35.929 --> 00:09:38.809 competition with Procter & Gamble, the P &G rivalry, 00:09:39.149 --> 00:09:42.070 is arguably the defining operational factor for 00:09:42.070 --> 00:09:44.289 Colgate -Palmolive throughout the entire 20th 00:09:44.289 --> 00:09:47.710 century. P &G, as the world's largest soap and 00:09:47.710 --> 00:09:50.409 detergent maker, just constantly drove competitive 00:09:50.409 --> 00:09:52.649 innovation. And the first major challenge came 00:09:52.649 --> 00:09:54.929 right after World War II, and it fundamentally 00:09:54.929 --> 00:09:58.009 changed the laundry aisle forever. It was a technological 00:09:58.009 --> 00:10:01.110 revolution, to put it mildly. P &G introduced 00:10:01.110 --> 00:10:03.490 Tide laundry detergent. This was one of the first 00:10:03.490 --> 00:10:06.590 synthetic heavy duty detergents. And unlike traditional 00:10:06.590 --> 00:10:08.490 soap products. Right, which were less effective 00:10:08.490 --> 00:10:11.090 in hard water, Tide performed brilliantly. This 00:10:11.090 --> 00:10:13.590 single innovation caused thousands of consumers 00:10:13.590 --> 00:10:16.289 to abandon Colgate's traditional soap based laundry 00:10:16.289 --> 00:10:19.370 products. It resulted in a significant, really 00:10:19.370 --> 00:10:21.750 sudden loss of market share for Colgate in that 00:10:21.750 --> 00:10:24.539 crucial category. The war then moved into oral 00:10:24.539 --> 00:10:27.220 care, threatening Colgate's established dominance 00:10:27.220 --> 00:10:30.210 with its flagship toothpaste. This was the toothpaste 00:10:30.210 --> 00:10:33.629 war. And Colgate lost its long held number one 00:10:33.629 --> 00:10:37.210 sales position globally when P &G began adding 00:10:37.210 --> 00:10:39.870 fluoride, a substance proven effective in fighting 00:10:39.870 --> 00:10:42.250 cavities to their competing brands, Crest and 00:10:42.250 --> 00:10:44.649 Gleam. So that forced Colgate to play catch up 00:10:44.649 --> 00:10:47.669 for years. For years. And while Colgate has since 00:10:47.669 --> 00:10:50.529 successfully reclaimed that number one global 00:10:50.529 --> 00:10:53.590 sales position, that setback was a painful lesson 00:10:53.590 --> 00:10:55.669 in the power of scientifically proven ingredient 00:10:55.669 --> 00:10:58.309 innovation. And the rivalry was so defining. 00:10:58.509 --> 00:11:01.169 that it extended directly into early mass media. 00:11:01.230 --> 00:11:03.759 We're talking the era of the soap opera. P &G 00:11:03.759 --> 00:11:06.519 essentially invented the sponsorship model for 00:11:06.519 --> 00:11:09.159 daytime serials. They funded them entirely just 00:11:09.159 --> 00:11:11.980 to reach that domestic audience. So Colgate -Palmolive 00:11:11.980 --> 00:11:14.460 had to compete aggressively in this space just 00:11:14.460 --> 00:11:16.320 to ensure their brands were advertised. And they 00:11:16.320 --> 00:11:19.059 famously sponsored two major shows. Right. The 00:11:19.059 --> 00:11:21.440 Doctors on NBC, which they backed for the show's 00:11:21.440 --> 00:11:25.860 entire 19 year run from 1963 to 1982. 19 years. 00:11:26.059 --> 00:11:28.379 And One Life to Live on ABC, which they sponsored 00:11:28.379 --> 00:11:31.940 from 1968 to 1974. But there was a strategic 00:11:31.940 --> 00:11:33.990 loss. In that sponsorship battle, right? Yeah. 00:11:34.090 --> 00:11:36.509 It shows just how cutthroat that media landscape 00:11:36.509 --> 00:11:39.429 was. Oh, yes. They attempted a major expansion. 00:11:39.889 --> 00:11:42.250 Colgate -Palmolive tried to retain its sponsorship 00:11:42.250 --> 00:11:44.629 of One Life to Live while also attempting to 00:11:44.629 --> 00:11:47.990 gain the crucial sponsorship slot for Agnes Nixon's 00:11:47.990 --> 00:11:51.070 newer, highly popular soap opera, All My Children. 00:11:51.309 --> 00:11:53.929 And ABC denied them? ABC denied them that dual 00:11:53.929 --> 00:11:56.389 opportunity. It was a move that really consolidated 00:11:56.389 --> 00:11:59.269 ABC's own control over their daytime programming 00:11:59.269 --> 00:12:01.950 block. And the era eventually came to an end. 00:12:02.200 --> 00:12:05.200 After The Doctors was canceled in 1982, Colgate 00:12:05.200 --> 00:12:08.179 -Palmolive just had a pet. They exited the soap 00:12:08.179 --> 00:12:10.870 opera sponsorship game entirely. They did. And 00:12:10.870 --> 00:12:13.250 P &G, showing its deep, continued commitment 00:12:13.250 --> 00:12:15.750 to the format, kept sponsoring shows until its 00:12:15.750 --> 00:12:18.350 last remaining serial, As the World Turns, was 00:12:18.350 --> 00:12:21.230 canceled in 2010. Wow. So the shift away from 00:12:21.230 --> 00:12:23.470 network level sponsorship coincides with this 00:12:23.470 --> 00:12:25.870 major internal transformation the company underwent. 00:12:26.289 --> 00:12:28.929 George Henry Lesh, who was president, CEO and 00:12:28.929 --> 00:12:31.590 chairman during the 60s and 70s, is widely credited 00:12:31.590 --> 00:12:34.169 with restructuring the whole firm. So his work 00:12:34.169 --> 00:12:36.490 took what was essentially a legacy soap and candle 00:12:36.490 --> 00:12:39.750 business. And transformed it into a modern international. 00:12:40.009 --> 00:12:43.009 focused diversified consumer products corporation. 00:12:43.529 --> 00:12:46.570 That restructuring was absolutely essential preparation 00:12:46.570 --> 00:12:49.710 for the more competitive globalized market of 00:12:49.710 --> 00:12:52.690 the late 20th century. That sets the stage perfectly 00:12:52.690 --> 00:12:56.049 for Section 3, strategic portfolio shifts and 00:12:56.049 --> 00:12:59.250 global reach in recent years. So that less transformation, 00:12:59.590 --> 00:13:01.830 it enabled the company to make these difficult 00:13:01.830 --> 00:13:04.669 choices needed to maximize margins. And that 00:13:04.669 --> 00:13:06.590 started with selling off low performing brands. 00:13:06.649 --> 00:13:09.399 Yes. The defining theme of the early 21st century 00:13:09.399 --> 00:13:12.360 for Colgate -Palmolive was focus. I mean, their 00:13:12.360 --> 00:13:15.200 biggest move was the 2005 laundry divestiture. 00:13:15.419 --> 00:13:18.200 This was a conscious decision to exit low margin, 00:13:18.279 --> 00:13:20.960 high competition segments where P &G just maintained 00:13:20.960 --> 00:13:23.860 dominance. They sold off underperforming laundry 00:13:23.860 --> 00:13:26.779 brands like Fab, Dynamo, Arctic Power. And they 00:13:26.779 --> 00:13:29.299 also sold the license for Ajax laundry detergent 00:13:29.299 --> 00:13:31.840 in the U .S., Canada and Puerto Rico to a company 00:13:31.840 --> 00:13:34.200 called Phoenix Brands. So they were signaling 00:13:34.200 --> 00:13:36.940 a really clear strategic pivot. Concentrating 00:13:36.940 --> 00:13:39.399 resources and R &D on the higher margin, premium 00:13:39.399 --> 00:13:41.620 segments, oral care, personal care, and pet care. 00:13:42.000 --> 00:13:44.279 Exactly. And this was a phased withdrawal from 00:13:44.279 --> 00:13:46.460 the laundry segment globally. It wasn't all at 00:13:46.460 --> 00:13:49.399 once. They later divested their detergent business 00:13:49.399 --> 00:13:52.899 in Colombia to Unilever and then sold some Asian 00:13:52.899 --> 00:13:55.740 laundry assets to P &G. And then most recently, 00:13:55.840 --> 00:13:59.539 in 2015, they completed the exit from major laundry 00:13:59.539 --> 00:14:02.440 markets. Right. By selling their Australian and 00:14:02.440 --> 00:14:06.879 New Zealand brands to Henkel for US $245 million. 00:14:07.860 --> 00:14:10.580 This systematic clean out of the laundry portfolio 00:14:10.580 --> 00:14:13.549 was a very calculated move to boost the overall 00:14:13.549 --> 00:14:15.909 profitability profile of the entire corporation. 00:14:16.230 --> 00:14:18.629 So if they were divesting low margin products, 00:14:18.789 --> 00:14:20.590 they were simultaneously doubling down on the 00:14:20.590 --> 00:14:23.870 extremely high margin areas, oral care and critically. 00:14:24.379 --> 00:14:27.120 pet nutrition. Their acquisition strategy demonstrates, 00:14:27.419 --> 00:14:29.840 well, acute financial intelligence. For instance, 00:14:29.980 --> 00:14:32.100 the pet nutrition segment, anchored by Hill's 00:14:32.100 --> 00:14:34.399 Pet Nutrition and Science Diet, often carries 00:14:34.399 --> 00:14:37.039 substantially higher margins than commodity soaps 00:14:37.039 --> 00:14:39.440 or even toothpaste. So there's a deliberate counterbalance 00:14:39.440 --> 00:14:41.519 to the razor -thin margins in the household goods 00:14:41.519 --> 00:14:44.320 sector. It is. And in oral care, they move strategically 00:14:44.320 --> 00:14:46.840 into the premium and natural space because they 00:14:46.840 --> 00:14:49.379 recognize that consumer preferences were changing. 00:14:49.659 --> 00:14:52.419 Right. Their 2006 acquisition of Tom's of Maine. 00:14:52.700 --> 00:14:55.860 Brilliant move. They got an 84 % stake for U 00:14:55.860 --> 00:14:59.179 .S. $100 million. Tom's was already this established, 00:14:59.279 --> 00:15:01.899 respected natural toothpaste maker since 1970. 00:15:02.480 --> 00:15:06.519 This gave Colgate instant, credible entry into 00:15:06.519 --> 00:15:09.419 the rapidly growing natural hygiene market without 00:15:09.419 --> 00:15:11.899 having to spend years building that trust from 00:15:11.899 --> 00:15:13.700 the ground up. And they reinforced that same 00:15:13.700 --> 00:15:16.539 strategy in 2020 by acquiring Hello Products 00:15:16.539 --> 00:15:19.379 LLC. Which was noted as one of the fastest growing 00:15:19.379 --> 00:15:22.960 premium oral care brands in the US. So what's 00:15:22.960 --> 00:15:25.080 the common thread in these acquisitions? It seems 00:15:25.080 --> 00:15:27.039 pretty clear. They're buying growth and premium 00:15:27.039 --> 00:15:29.340 positioning. They leverage the scale of their 00:15:29.340 --> 00:15:31.759 global distribution network, you know, the 34 00:15:31.759 --> 00:15:34.139 ,000 employees, the 200 countries, and they just 00:15:34.139 --> 00:15:36.779 inject these niche, high growth, high margin 00:15:36.779 --> 00:15:39.159 brands directly into it. It's significantly more 00:15:39.159 --> 00:15:40.840 efficient than organic internal development. 00:15:41.059 --> 00:15:43.639 Absolutely. And the focus on efficiency is also 00:15:43.639 --> 00:15:45.740 reflected in their internal restructuring. Like 00:15:45.740 --> 00:15:49.029 that 2012. plan to cut 2 ,310 workers, which 00:15:49.029 --> 00:15:51.309 was about 6 % of the workforce, just to drive 00:15:51.309 --> 00:15:54.029 efficiency by 2016. And despite this continuous 00:15:54.029 --> 00:15:56.850 optimization, the market still views them as 00:15:56.850 --> 00:16:00.669 a corporate pillar. They ranked 184th on the 00:16:00.669 --> 00:16:04.080 Fortune 500 list in 2018. And perhaps more relevant 00:16:04.080 --> 00:16:06.600 to their consumer model, they rank 15th on the 00:16:06.600 --> 00:16:08.980 most trusted brands list by Morning Consult in 00:16:08.980 --> 00:16:12.299 2021. That combination of massive financial scale 00:16:12.299 --> 00:16:15.399 and deep consumer trust is central to their current 00:16:15.399 --> 00:16:18.399 operational paradox. It is. They have subsidiary 00:16:18.399 --> 00:16:21.500 organizations spanning 200 countries, making 00:16:21.500 --> 00:16:23.799 them truly global. Yet they're only publicly 00:16:23.799 --> 00:16:26.460 listed in three nations, the United States, India 00:16:26.460 --> 00:16:28.720 and Pakistan. Which shows you where their key 00:16:28.720 --> 00:16:31.940 financial and emerging market focus lies. Precisely. 00:16:32.240 --> 00:16:34.779 but this immense global footprint and this deep 00:16:34.779 --> 00:16:37.759 consumer trust. That's exactly why our next section 00:16:37.759 --> 00:16:40.240 on corporate responsibility is so contentious. 00:16:40.419 --> 00:16:42.700 Let's pivot now to section four, the paradox 00:16:42.700 --> 00:16:45.440 of corporate responsibility, ethics and environmental 00:16:45.440 --> 00:16:48.080 footprint. We should probably start with a positive 00:16:48.080 --> 00:16:50.519 legacy, the community goodwill they've accumulated 00:16:50.519 --> 00:16:53.080 over two centuries. Absolutely. The historical 00:16:53.080 --> 00:16:55.419 legacy is strong. I mean, the most prominent 00:16:55.419 --> 00:16:58.299 example is Colgate University. Madison University 00:16:58.299 --> 00:17:01.820 was renamed in 1890 specifically to honor the 00:17:01.820 --> 00:17:04.099 Colgate family for their decades of sustained 00:17:04.099 --> 00:17:06.380 financial support and commitment to the institution. 00:17:06.740 --> 00:17:09.160 And their community engagement is tangible and 00:17:09.160 --> 00:17:12.519 active today. They sponsor the Colgate Women's 00:17:12.519 --> 00:17:15.200 Games. Which is noted as the nation's largest 00:17:15.200 --> 00:17:18.180 amateur track series, open to girls from elementary 00:17:18.180 --> 00:17:20.799 school right through college. And this isn't 00:17:20.799 --> 00:17:23.180 just advertising. It's providing direct opportunities, 00:17:23.519 --> 00:17:26.099 including trophies and educational grants and 00:17:26.099 --> 00:17:28.339 aid. That's significant. It is. Furthermore, 00:17:28.559 --> 00:17:30.160 they've supported the Starlight Children Foundation 00:17:30.160 --> 00:17:33.119 for over 20 years, focusing on using entertainment 00:17:33.119 --> 00:17:35.640 and family activities to help seriously ill children 00:17:35.640 --> 00:17:38.200 cope. And their online presence is also dedicated 00:17:38.200 --> 00:17:40.630 to education. I've seen the toothbrushing songs 00:17:40.630 --> 00:17:42.710 and the animated videos with their old mascot, 00:17:42.829 --> 00:17:45.809 Dr. Rabbit. Right. Building those positive educational 00:17:45.809 --> 00:17:48.849 brand associations from a very early age. But 00:17:48.849 --> 00:17:52.509 that immense scale and that global profit come 00:17:52.509 --> 00:17:55.150 with some immense ethical tradeoffs. Let's delve 00:17:55.150 --> 00:17:57.109 into the areas where they face really serious 00:17:57.109 --> 00:17:59.710 criticism. And we have to start with the very 00:17:59.710 --> 00:18:03.000 nuanced issue. animal testing this is a classic 00:18:03.000 --> 00:18:05.160 example of corporate compromise driven by market 00:18:05.160 --> 00:18:09.180 access so in 2011 PETA recognized Colgate -Palmolive 00:18:09.180 --> 00:18:12.660 under a specific very conditional category working 00:18:12.660 --> 00:18:15.339 for regulatory change okay what does that actually 00:18:15.339 --> 00:18:17.839 mean it's a classification given to companies 00:18:17.839 --> 00:18:20.200 that commit to only testing on animals when it's 00:18:20.200 --> 00:18:22.319 explicitly mandated by government regulations 00:18:22.319 --> 00:18:25.359 while at the same time actively funding and seeking 00:18:25.359 --> 00:18:28.130 alternatives wait a minute How can PETA recognize 00:18:28.130 --> 00:18:30.730 them as working for change if their decision 00:18:30.730 --> 00:18:33.069 to stay in the profitable Chinese market mandates 00:18:33.069 --> 00:18:35.589 continued animal testing for certain cosmetic 00:18:35.589 --> 00:18:38.029 products? I mean, doesn't that recognition serve 00:18:38.029 --> 00:18:40.009 as a kind of tacit approval for that compromise? 00:18:40.349 --> 00:18:43.210 That is precisely the core conflict. The recognition 00:18:43.210 --> 00:18:45.730 is, well, technically accurate. They are seeking 00:18:45.730 --> 00:18:48.130 alternatives. But their choice to remain in the 00:18:48.130 --> 00:18:51.009 massive lucrative Chinese market means they are, 00:18:51.130 --> 00:18:54.329 by extension, funding and participating in mandated 00:18:54.329 --> 00:18:57.039 testing. And the source material highlights that 00:18:57.039 --> 00:18:59.619 other international corporations have chosen 00:18:59.619 --> 00:19:02.279 to decline entry to the Chinese market entirely 00:19:02.279 --> 00:19:06.460 to maintain a 100 % cruelty -free commitment. 00:19:06.880 --> 00:19:09.240 Right. So Colgate -Palmolive chose the path that 00:19:09.240 --> 00:19:11.859 balances profits against an ethical ideal. And 00:19:11.859 --> 00:19:13.660 it's a choice that draws continuous criticism 00:19:13.660 --> 00:19:15.940 from animal rights groups. Shifting to product 00:19:15.940 --> 00:19:18.259 formulation, let's discuss the controversy around 00:19:18.259 --> 00:19:21.400 triclosan, the antibacterial agent. In 2011, 00:19:21.599 --> 00:19:23.680 the company made a pretty critical choice regarding 00:19:23.680 --> 00:19:26.460 its use. They did. They chose to retain triclosan 00:19:26.460 --> 00:19:28.799 in their market -leading Colgate Total toothpaste 00:19:28.799 --> 00:19:31.160 range, even while they were withdrawing it from 00:19:31.160 --> 00:19:33.680 several other product lines. This was a highly 00:19:33.680 --> 00:19:36.309 contentious decision. Why? What was the issue 00:19:36.309 --> 00:19:39.109 with triclosan? At that time, health and environmental 00:19:39.109 --> 00:19:42.210 concerns were really mounting rapidly. Triclosan 00:19:42.210 --> 00:19:44.369 had been linked to potential issues like endocrine 00:19:44.369 --> 00:19:46.329 disruption in humans, and it was known to be 00:19:46.329 --> 00:19:48.710 highly persistent in the environment, polluting 00:19:48.710 --> 00:19:51.630 waterways, and impacting aquatic life. And competitors 00:19:51.630 --> 00:19:54.740 were phasing it out. Voluntarily, yes. Colgate 00:19:54.740 --> 00:19:56.660 -Palmolive's defense for keeping it in total 00:19:56.660 --> 00:19:59.660 was crucial. They had extensive clinical data 00:19:59.660 --> 00:20:02.319 showing that triclosan, when combined with a 00:20:02.319 --> 00:20:05.460 specific copolymer in total toothpaste, provided 00:20:05.460 --> 00:20:08.460 superior efficacy against gingivitis and plaque 00:20:08.460 --> 00:20:11.279 compared to non -triclosan formulas. And the 00:20:11.279 --> 00:20:14.099 FDA. The FDA ultimately reviewed the data and 00:20:14.099 --> 00:20:16.619 allowed total to remain on the market. But the 00:20:16.619 --> 00:20:18.640 decision to stick with a controversial chemical 00:20:18.640 --> 00:20:22.160 purely for competitive efficacy generated significant 00:20:22.160 --> 00:20:24.960 public pushback. So beyond product components, 00:20:25.279 --> 00:20:27.539 the largest liability for a company of this scale 00:20:27.539 --> 00:20:30.700 has to be its global supply chain. And the human 00:20:30.700 --> 00:20:33.240 rights record is particularly poor, according 00:20:33.240 --> 00:20:35.640 to watchdog groups. Yes. The Ethical Consumer 00:20:35.640 --> 00:20:38.039 website, which provides these comprehensive ratings 00:20:38.039 --> 00:20:40.759 for corporate behavior, gave Colgate -Palmolive 00:20:40.759 --> 00:20:43.509 a worst rating for human rights in January 2024. 00:20:43.950 --> 00:20:46.309 That's a severe indictment. It stems from what? 00:20:46.329 --> 00:20:49.490 A lack of transparency. A profound lack of transparency 00:20:49.490 --> 00:20:51.930 and proactive management across their global 00:20:51.930 --> 00:20:54.289 sourcing network. What were the specific organizational 00:20:54.289 --> 00:20:56.549 gaps that led to that worst rating? There were 00:20:56.549 --> 00:20:59.759 three main deficiencies cited. First, a lack 00:20:59.759 --> 00:21:02.119 of publicly available clear standards for working 00:21:02.119 --> 00:21:05.180 hours and wages across their supplier base, meaning 00:21:05.180 --> 00:21:07.339 they don't ensure a living wage or reasonable 00:21:07.339 --> 00:21:10.940 hours. OK. Second, they provided no outcome information 00:21:10.940 --> 00:21:13.599 from any supply chain audits they claim to conduct. 00:21:13.799 --> 00:21:16.880 So if you audit. but you don't disclose the findings 00:21:16.880 --> 00:21:19.240 or what you did about them, the audit is effectively 00:21:19.240 --> 00:21:22.519 meaningless to external watchdogs. And the third. 00:21:22.740 --> 00:21:25.559 There was no clear anonymous mechanism for workers 00:21:25.559 --> 00:21:27.859 in their supply chain to make confidential complaints 00:21:27.859 --> 00:21:30.819 or raise serious issues without fear of reprisal. 00:21:31.039 --> 00:21:34.299 This triad of non -transparency suggests a failure 00:21:34.299 --> 00:21:36.880 to prioritize human welfare in these complex 00:21:36.880 --> 00:21:39.380 sourcing regions. Let's transition now to the 00:21:39.380 --> 00:21:41.619 environmental deep dive, starting with the legacy 00:21:41.619 --> 00:21:43.640 issue of hazardous waste in New Jersey. This 00:21:43.640 --> 00:21:45.960 takes us back to the chem... Sol Federal Superfund 00:21:45.960 --> 00:21:49.019 site in Piscataway, New Jersey. In 2017, as a 00:21:49.019 --> 00:21:51.119 successor to the Menin Company, which Colgate 00:21:51.119 --> 00:21:53.640 -Palmolive acquired, they were implicated alongside 00:21:53.640 --> 00:21:56.539 roughly 300 other companies as potentially responsible 00:21:56.539 --> 00:21:59.619 parties for historic contamination. And what 00:21:59.619 --> 00:22:02.440 toxic materials were involved in this cleanup? 00:22:02.559 --> 00:22:05.079 We're talking serious stuff, I assume. Oh, very. 00:22:05.259 --> 00:22:08.039 The issue involved significant contamination, 00:22:08.319 --> 00:22:12.619 specifically of an estimated 18 ,500 cubic yards 00:22:12.619 --> 00:22:15.660 of soil. And it was contaminated with highly 00:22:15.660 --> 00:22:18.579 toxic substances, including volatile organic 00:22:18.579 --> 00:22:23.019 compounds, or VOCs, PCBs, and lead. So what was 00:22:23.019 --> 00:22:25.420 the resolution? It was a proposed $23 million 00:22:25.420 --> 00:22:27.859 agreement with the government and New Jersey 00:22:27.859 --> 00:22:30.819 state authorities. It required Colgate -Palmolive 00:22:30.819 --> 00:22:32.880 and the other involved companies to fund the 00:22:32.880 --> 00:22:35.180 extensive cleanup of both the contaminated soil 00:22:35.180 --> 00:22:38.259 and the underlying groundwater. It just highlights 00:22:38.259 --> 00:22:40.259 that historical environmental negligence comes 00:22:40.259 --> 00:22:43.079 with a massive, multi -decade financial cost. 00:22:43.279 --> 00:22:45.240 It certainly does. Turning to more modern concerns, 00:22:45.500 --> 00:22:47.720 plastic pollution is arguably the most visible 00:22:47.720 --> 00:22:49.720 environmental footprint for any consumer goods 00:22:49.720 --> 00:22:52.519 company. And in 2019, Colgate -Palmolive was 00:22:52.519 --> 00:22:54.660 cited by the Break Free from Plastic organization 00:22:54.660 --> 00:22:57.759 as one of the world's top 10 plastic polluters. 00:22:57.920 --> 00:23:00.119 So how do they respond to that? This is where 00:23:00.119 --> 00:23:02.440 we need to clearly define the nuance in their 00:23:02.440 --> 00:23:05.140 corporate response. The company committed to 00:23:05.140 --> 00:23:07.779 achieving 100 percent recyclability of plastics 00:23:07.779 --> 00:23:10.640 and packaging across all categories by 2025. 00:23:11.200 --> 00:23:13.309 Which sounds like an excellent. goal it sounds 00:23:13.309 --> 00:23:16.170 great right however the sources note that they 00:23:16.170 --> 00:23:19.049 made no corresponding public commitment to reducing 00:23:19.049 --> 00:23:21.990 the use of virgin plastic and that is a critical 00:23:21.990 --> 00:23:25.509 distinction why does focusing only on recyclability 00:23:26.089 --> 00:23:29.269 but not reducing virgin plastic, still pose a 00:23:29.269 --> 00:23:31.470 massive environmental problem. Because the goal 00:23:31.470 --> 00:23:33.789 of 100 % recyclability focuses on the end -of 00:23:33.789 --> 00:23:36.609 -life solution for the product, not the upstream 00:23:36.609 --> 00:23:39.869 impact of its creation. The continued massive 00:23:39.869 --> 00:23:42.329 production of virgin plastic requires fossil 00:23:42.329 --> 00:23:45.509 fuels, energy -intensive processes, extraction. 00:23:46.029 --> 00:23:48.450 So if they simply use massive amounts of new 00:23:48.450 --> 00:23:50.910 plastic but ensure it can be recycled, they are 00:23:50.910 --> 00:23:52.829 passing the responsibility for actual pollution 00:23:52.829 --> 00:23:55.329 reduction onto you, the consumer, and the recycling. 00:23:55.470 --> 00:23:57.509 infrastructure. While still contributing heavily 00:23:57.509 --> 00:24:00.210 to fossil fuel demand and raw resource depletion. 00:24:00.250 --> 00:24:02.809 Critics often view it as a classic greenwashing 00:24:02.809 --> 00:24:05.250 tactic. And the raw material sourcing for the 00:24:05.250 --> 00:24:07.670 soap and personal care segments. That brings 00:24:07.670 --> 00:24:10.769 us back to palm oil and its devastating link 00:24:10.769 --> 00:24:14.150 to deforestation and social abuses. This is one 00:24:14.150 --> 00:24:16.849 of the darkest areas of scrutiny for them. Global 00:24:16.849 --> 00:24:20.970 Witness reported in 2021 and 2022 that Colgate 00:24:20.970 --> 00:24:23.869 Palmolive used palm oil suppliers that were linked 00:24:23.869 --> 00:24:26.750 to documented cases of bribery, the brutalization 00:24:26.750 --> 00:24:29.650 of local villagers and even child labor in their 00:24:29.650 --> 00:24:32.430 operations in Papua New Guinea. That is severe 00:24:32.430 --> 00:24:34.789 and immediate ethical failure at the supply chain 00:24:34.789 --> 00:24:36.990 level. How did watchdog groups respond to that? 00:24:37.289 --> 00:24:40.170 The Rainforest Action Network, or RAN, gave Colgate 00:24:40.170 --> 00:24:42.529 -Palmolive an F score, a failing grade on their 00:24:42.529 --> 00:24:45.769 2021 scorecard. This tracks corporate responsibility 00:24:45.769 --> 00:24:48.289 regarding deforestation and human rights abuses 00:24:48.289 --> 00:24:50.769 in supply chains. A failing grade. That said, 00:24:50.869 --> 00:24:53.230 subsequent actions have resulted in some incremental 00:24:53.230 --> 00:24:55.650 improvement. They did manage to raise that score 00:24:55.650 --> 00:24:58.809 to a D in November 2023. What action did they 00:24:58.809 --> 00:25:01.160 take to warrant that slight improvement? One 00:25:01.160 --> 00:25:04.940 key positive step happened in 2021. Colgate Palmolive 00:25:04.940 --> 00:25:07.359 publicly disclosed the specific forest impact 00:25:07.359 --> 00:25:10.160 of its palm oil supply chain in a notoriously 00:25:10.160 --> 00:25:13.400 sensitive region, North Sumatra, Indonesia. So 00:25:13.400 --> 00:25:15.900 disclosure and transparency, even when the data 00:25:15.900 --> 00:25:18.480 is bad, are always the necessary first steps. 00:25:18.640 --> 00:25:20.980 Always. You can't manage what you don't measure 00:25:20.980 --> 00:25:23.440 and report. Now, perhaps the most strategically 00:25:23.440 --> 00:25:26.099 damaging criticism in the modern era concerns 00:25:26.099 --> 00:25:28.599 their climate action commitments and their emissions 00:25:28.599 --> 00:25:31.309 failure. This ties directly back to their overall 00:25:31.309 --> 00:25:34.369 corporate viability. It absolutely does. A detailed 00:25:34.369 --> 00:25:37.750 June 2023 report from Planet Tracker was damning. 00:25:37.789 --> 00:25:40.490 It stated that Colgate -Palmolive is on a path 00:25:40.490 --> 00:25:42.690 to missing its approved science -based targets 00:25:42.690 --> 00:25:45.809 emissions by a factor of seven. A factor of seven. 00:25:45.950 --> 00:25:48.349 That is not a minor deviation. That is a catastrophic 00:25:48.349 --> 00:25:50.970 failure to meet your own targets. It is. And 00:25:50.970 --> 00:25:53.470 this massive failure rate occurs even when we 00:25:53.470 --> 00:25:56.230 exclude a certain category of emissions. OK, 00:25:56.309 --> 00:25:58.289 we need to be clear for the listener. What are 00:25:58.289 --> 00:26:01.650 these so -called? Optional Indirect Use Emissions, 00:26:01.769 --> 00:26:04.509 known as Scope 3, and why does excluding them 00:26:04.509 --> 00:26:07.259 make the missed target seven times worse? This 00:26:07.259 --> 00:26:09.500 is a critical technical point in modern corporate 00:26:09.500 --> 00:26:12.119 sustainability. Emissions are typically broken 00:26:12.119 --> 00:26:15.200 into three scopes. Scope one is direct emissions 00:26:15.200 --> 00:26:17.920 from your own sources, like running their factories. 00:26:18.440 --> 00:26:21.279 Scope two is indirect emissions from the energy 00:26:21.279 --> 00:26:23.440 you purchase, like the electricity they buy. 00:26:23.619 --> 00:26:25.799 And scope three? Scope three encompasses all 00:26:25.799 --> 00:26:28.000 other indirect emissions that occur throughout 00:26:28.000 --> 00:26:30.880 the company's entire value chain. This includes 00:26:30.880 --> 00:26:33.400 things like the extraction and processing of 00:26:33.400 --> 00:26:35.680 raw materials, like that palm oil or plastic 00:26:35.680 --> 00:26:38.809 resin. the transportation of goods, the use of 00:26:38.809 --> 00:26:41.309 products by consumers, and the disposal of waste. 00:26:41.589 --> 00:26:43.789 So Scope 3 is basically everything that happens 00:26:43.789 --> 00:26:46.210 before the product gets to the factory floor 00:26:46.210 --> 00:26:48.569 and after it leaves the shelf. Precisely. And 00:26:48.569 --> 00:26:50.970 for a consumer goods company, Scope 3 activities 00:26:50.970 --> 00:26:54.450 often account for 80 % to 90 % of their total 00:26:54.450 --> 00:26:56.470 climate footprint. So it's the biggest piece 00:26:56.470 --> 00:26:59.339 of the pie. By far. And Planet Trekker's analysis 00:26:59.339 --> 00:27:02.200 noted that Colgate -Palmolive provides no clear 00:27:02.200 --> 00:27:04.480 strategy to mitigate its main source of emissions, 00:27:04.779 --> 00:27:07.640 which is overwhelmingly these upstream scope 00:27:07.640 --> 00:27:10.420 three activities. So if you exclude that massive 00:27:10.420 --> 00:27:12.500 piece of the pie and they still miss their targets 00:27:12.500 --> 00:27:14.940 by a factor of seven, it suggests their current 00:27:14.940 --> 00:27:17.200 operational model is fundamentally misaligned 00:27:17.200 --> 00:27:19.160 with their stated climate goals. And what are 00:27:19.160 --> 00:27:21.140 the implications of this misalignment, not just 00:27:21.140 --> 00:27:24.059 ethically, but financially? Sustainability Beat 00:27:24.059 --> 00:27:27.160 highlighted this in August 2023. They warned 00:27:27.160 --> 00:27:29.779 that this failure jeopardizes future profits. 00:27:30.099 --> 00:27:32.839 A failure to manage massive scope three emissions 00:27:32.839 --> 00:27:36.079 exposes the company to regulatory risk, carbon 00:27:36.079 --> 00:27:38.519 taxes, supply chain disruptions due to climate 00:27:38.519 --> 00:27:41.579 change, and most pressingly, reputational risk. 00:27:41.759 --> 00:27:43.500 Which puts them in dangerous territory of being 00:27:43.500 --> 00:27:46.319 accused of greenwashing. Exactly. If the most 00:27:46.319 --> 00:27:48.640 trusted brands list relies on consumers believing 00:27:48.640 --> 00:27:51.140 your stated goals, failing them by a factor of 00:27:51.140 --> 00:27:53.440 seven is a major. threat to your long -term value. 00:27:53.640 --> 00:27:56.119 So let's synthesize this paradox. If we look 00:27:56.119 --> 00:27:58.880 at the comprehensive 2024 rating from Ethical 00:27:58.880 --> 00:28:01.400 Consumer, what is the final ethical scorecard 00:28:01.400 --> 00:28:03.900 for Colgate Palmolive? The report is starkly 00:28:03.900 --> 00:28:06.660 mixed. They received the worst possible rating 00:28:06.660 --> 00:28:10.160 for three key high -impact categories, climate 00:28:10.160 --> 00:28:12.900 change, plastic use, and palm oil deforestation. 00:28:13.259 --> 00:28:15.319 But on the positive side? On the positive side, 00:28:15.440 --> 00:28:17.559 they did receive their best rating, the highest 00:28:17.559 --> 00:28:20.160 possible, for avoiding toxic chemicals in their 00:28:20.160 --> 00:28:22.779 products. That's a reflection of their historical 00:28:22.779 --> 00:28:25.420 commitment to R &D and safety, stemming all the 00:28:25.420 --> 00:28:27.819 way back to those early research labs. So the 00:28:27.819 --> 00:28:29.500 lesson here is that corporate responsibility 00:28:29.500 --> 00:28:32.779 is never a uniform success or failure. It's a 00:28:32.779 --> 00:28:35.259 dynamic struggle across multiple fronts. It is. 00:28:35.259 --> 00:28:37.640 A very complicated picture. It is. Let's shift 00:28:37.640 --> 00:28:40.799 gears for our final segment, Section 5, the operational 00:28:40.799 --> 00:28:44.700 network and brand legacy. Despite all this controversy, 00:28:44.920 --> 00:28:47.240 the sheer infrastructure that moves those billions 00:28:47.240 --> 00:28:50.359 of products daily is immense and highly specialized. 00:28:50.680 --> 00:28:53.259 It truly is a marvel of logistical engineering. 00:28:53.619 --> 00:28:55.980 I mean, within the US alone, the company operates 00:28:55.980 --> 00:28:58.559 approximately 60 properties and you can see the 00:28:58.559 --> 00:29:00.420 historical evolution in their manufacturing. 00:29:01.279 --> 00:29:03.599 For instance, major facilities were relocated 00:29:03.599 --> 00:29:05.980 from Morristown, New Jersey, the old Menin headquarters, 00:29:06.380 --> 00:29:10.019 to new, more efficient hubs in places like Hodges, 00:29:10.220 --> 00:29:13.819 South Carolina, Morristown, Tennessee, and Cambridge, 00:29:13.960 --> 00:29:16.720 Ohio. And where is the intelligence and innovation 00:29:16.720 --> 00:29:19.359 concentrated? Where's the R &D? The primary R 00:29:19.359 --> 00:29:22.000 &D hub for oral, personal, and home care products 00:29:22.000 --> 00:29:25.119 is centralized in Piscataway, New Jersey. This 00:29:25.119 --> 00:29:27.400 is where the core product formulas like Colgate 00:29:27.400 --> 00:29:29.660 Total are developed and refined. And for the 00:29:29.660 --> 00:29:31.839 pet food? Separately, the R &D for their highly 00:29:31.839 --> 00:29:34.680 lucrative pet nutrition segment, Hills, is housed 00:29:34.680 --> 00:29:37.720 in Topeka, Kansas. That reflects the very specialized 00:29:37.720 --> 00:29:40.259 scientific demands of veterinary health. But 00:29:40.259 --> 00:29:42.640 there's one particular manufacturing site that 00:29:42.640 --> 00:29:45.640 holds an enormous amount of global critical importance. 00:29:45.859 --> 00:29:48.339 That would be the chief manufacturing plant located 00:29:48.339 --> 00:29:51.670 in Burlington Township, New Jersey. This facility 00:29:51.670 --> 00:29:54.390 has been designated as the global fragrance and 00:29:54.390 --> 00:29:57.390 flavor hub. It produces all of the fragrance 00:29:57.390 --> 00:30:00.390 and flavor oils used across all of the company's 00:30:00.390 --> 00:30:02.750 worldwide facilities. All of them. All of them. 00:30:02.789 --> 00:30:05.609 Think about that centralization. Every scent 00:30:05.609 --> 00:30:08.730 in every bottle of Irish spring or soft soap 00:30:08.730 --> 00:30:13.079 and every flavor in every tube of Colgate. originates 00:30:13.079 --> 00:30:15.400 in that one New Jersey location. That's amazing. 00:30:15.619 --> 00:30:18.420 But how does that centralization affect their 00:30:18.420 --> 00:30:21.220 vulnerability to supply chain disruption? I mean 00:30:21.220 --> 00:30:22.940 if anything happened at Burlington Township it 00:30:22.940 --> 00:30:24.640 would cripple their global production overnight. 00:30:25.210 --> 00:30:27.109 It creates a tremendous single point of failure, 00:30:27.289 --> 00:30:30.430 certainly, but it also allows for unparalleled 00:30:30.430 --> 00:30:33.069 control over their proprietary formulas and ensures 00:30:33.069 --> 00:30:36.430 a consistency of quality across all 70 plus countries 00:30:36.430 --> 00:30:38.470 where they operate their own factories. Right. 00:30:38.609 --> 00:30:41.109 And overseas, they have approximately 280 properties. 00:30:41.390 --> 00:30:43.750 Yeah, 80 of which are owned, including major 00:30:43.750 --> 00:30:46.009 facilities in critical emerging markets like 00:30:46.009 --> 00:30:48.829 Brazil, China, India, Mexico, Poland and Vietnam. 00:30:49.130 --> 00:30:50.990 Let's run through the full brand portfolio now 00:30:50.990 --> 00:30:53.710 because the breadth is truly surprising and it 00:30:53.710 --> 00:30:55.900 really illustrates. that strategic shift toward 00:30:55.900 --> 00:30:58.500 high -margin segments. Sure. We can categorize 00:30:58.500 --> 00:31:00.680 their current mix. In the cleaning segment, you 00:31:00.680 --> 00:31:04.119 have household staples like Ajax Cleanser, Fabuloso, 00:31:04.259 --> 00:31:07.220 and Murphy Oil Soap. Then the personal care category 00:31:07.220 --> 00:31:10.559 includes legacy names like Iris Spring, Speedstick, 00:31:10.799 --> 00:31:14.019 Menin, Palmolive, and the acquired natural brands 00:31:14.019 --> 00:31:16.740 like Tom's of Maine and Soft Soap. And the core 00:31:16.740 --> 00:31:19.839 of the business remains oral care. Featuring 00:31:19.839 --> 00:31:22.059 the flagship Colgate, the highly specialized 00:31:22.059 --> 00:31:25.000 European brand Elmex, and that premium acquired 00:31:25.000 --> 00:31:28.619 brand, Hello Products. And we cannot overstate 00:31:28.619 --> 00:31:30.819 the importance of the veterinary segment, Hill's 00:31:30.819 --> 00:31:33.299 Pet Nutrition and Science Diet. These premium 00:31:33.299 --> 00:31:35.359 vet -recommended foods carry the high margins 00:31:35.359 --> 00:31:37.480 that stabilize the entire conglomerate against 00:31:37.480 --> 00:31:39.339 the low -cost competition in the soap market. 00:31:39.599 --> 00:31:41.440 And for those of us who appreciate a little nostalgia, 00:31:41.880 --> 00:31:43.779 let's remember some of the discontinued brands 00:31:43.779 --> 00:31:46.460 that connect Colgate -Palmolive to consumer history. 00:31:46.910 --> 00:31:49.490 Oh, there are many, and they reflect their divestment 00:31:49.490 --> 00:31:53.039 strategy. We mentioned the perfumed soap cashmere 00:31:53.039 --> 00:31:55.980 bouquet and the original Colgate ribbon dental 00:31:55.980 --> 00:31:59.220 cream in its early format. They also had fluoride 00:31:59.220 --> 00:32:02.019 toothpaste like Brisk and Q that just failed 00:32:02.019 --> 00:32:04.319 to gain traction against Crest. And of course, 00:32:04.359 --> 00:32:06.440 the U .S. laundry brands they sold off like Dynamo 00:32:06.440 --> 00:32:08.700 and Fab. Yes, but I'm sure many listeners will 00:32:08.700 --> 00:32:11.400 remember Soaky. The children's bubble bath sold 00:32:11.400 --> 00:32:13.880 in those plastic character bottles. Right. It 00:32:13.880 --> 00:32:16.099 represents that deep cultural penetration that 00:32:16.099 --> 00:32:19.220 only a handful of CPG companies ever really achieve. 00:32:19.720 --> 00:32:21.279 It's a great reminder that these companies sell 00:32:21.279 --> 00:32:23.519 more than just product. They sell memory and 00:32:23.519 --> 00:32:25.869 utility. And speaking of utility, here's one 00:32:25.869 --> 00:32:29.049 final fun anecdote. It's related to the millions 00:32:29.049 --> 00:32:31.609 of bottles of palmolive dish soap sold annually. 00:32:31.809 --> 00:32:34.829 The iconic image of the hand on the label. Yeah. 00:32:34.910 --> 00:32:37.769 It belongs to a real person. A hand model named 00:32:37.769 --> 00:32:40.069 Elizabeth Barber, illustrated from a photograph 00:32:40.069 --> 00:32:43.109 taken way back in 1985 when the image was last 00:32:43.109 --> 00:32:46.210 updated. That detail really brings that ubiquitous 00:32:46.210 --> 00:32:48.970 label to life. Finally, let's acknowledge their 00:32:48.970 --> 00:32:51.549 operational response to recent geopolitical events. 00:32:51.849 --> 00:32:54.789 What was their stance following? the 2022 Russian 00:32:54.789 --> 00:32:57.410 invasion of Ukraine. Colgate Palmolive announced 00:32:57.410 --> 00:33:00.930 a really clear operational split. They suspended 00:33:00.930 --> 00:33:03.970 all imports and sales within Russia, limiting 00:33:03.970 --> 00:33:06.190 their continued operations only to essential 00:33:06.190 --> 00:33:09.539 health and hygiene products. And crucially. Critically, 00:33:09.579 --> 00:33:12.519 they also halted all capital investments, media, 00:33:12.759 --> 00:33:15.259 advertising, and promotional activities within 00:33:15.259 --> 00:33:18.500 the country. It's a modern, very measured corporate 00:33:18.500 --> 00:33:21.220 response aimed at minimizing commercial activity 00:33:21.220 --> 00:33:23.420 while attempting to fulfill basic humanitarian 00:33:23.420 --> 00:33:26.279 needs for hygiene. So what does this all mean 00:33:26.279 --> 00:33:28.539 when we put the two centuries of history on the 00:33:28.539 --> 00:33:31.230 table? We've traced Colgate -Palmola from a small 00:33:31.230 --> 00:33:33.569 Baptist -founded soap and candle maker. Right. 00:33:33.630 --> 00:33:35.769 We celebrated its innovations like the toothpaste 00:33:35.769 --> 00:33:38.789 tube that redefined hygiene. And analyzed its 00:33:38.789 --> 00:33:41.670 defining market battles with P &G. And we've 00:33:41.670 --> 00:33:43.829 also had to confront the inescapable reality 00:33:43.829 --> 00:33:46.990 of its 21st century position. It's a massive 00:33:46.990 --> 00:33:50.170 trusted conglomerate that is simultaneously facing 00:33:50.170 --> 00:33:53.390 intense ethical pressure, a worst rating for 00:33:53.390 --> 00:33:56.210 human rights transparency and profound environmental 00:33:56.210 --> 00:33:59.170 scrutiny. It's cited as a top plastic polluter. 00:33:59.230 --> 00:34:01.309 It's linked to deforestation through palm oil 00:34:01.309 --> 00:34:04.410 sourcing. And most critically, it's facing analysis 00:34:04.410 --> 00:34:06.609 that suggests its current operational trajectory 00:34:06.609 --> 00:34:09.369 will cause it to miss its climate emissions goals 00:34:09.369 --> 00:34:12.179 by a factor of. Which leaves us with a final 00:34:12.179 --> 00:34:14.320 provocative thought to chew on as we wrap up 00:34:14.320 --> 00:34:17.340 this deep dive. Colgate -Palmolive is a company 00:34:17.340 --> 00:34:19.559 that has simultaneously celebrated ranking consistently 00:34:19.559 --> 00:34:21.719 among the most trusted brands about consumers 00:34:21.719 --> 00:34:24.920 globally and profoundly criticized for the ethical 00:34:24.920 --> 00:34:28.039 cost of its environmental footprint. This friction 00:34:28.039 --> 00:34:30.099 raises the fundamental and unavoidable question 00:34:30.099 --> 00:34:33.170 for every modern learner and consumer. How much 00:34:33.170 --> 00:34:35.510 ethical compromise in terms of deforestation, 00:34:35.670 --> 00:34:38.690 plastic use, supply chain transparency, or climate 00:34:38.690 --> 00:34:41.250 failure are we collectively willing to accept 00:34:41.250 --> 00:34:43.949 in exchange for low -cost, convenient, and truly 00:34:43.949 --> 00:34:46.929 essential global hygiene products? The complexity 00:34:46.929 --> 00:34:50.030 of that answer defines consumer capitalism today. 00:34:50.250 --> 00:34:52.730 That's a deep dive that requires far more than 00:34:52.730 --> 00:34:55.570 soap and water to clean up. Thank you for joining 00:34:55.570 --> 00:34:57.190 us on The Deep Dive. We'll see you next time.