Colgate leans harder on science-led innovation and a Colgate Total relaunch to fix soft volumes

What happened

Colgate-Palmolive is doubling down on its longstanding strategy of science-led innovation, highlighted by a global relaunch of Colgate Total, to counteract recent soft volumes and restore growth momentum. This push comes against a backdrop of only 1% year-over-year net sales growth in Q2 2025, driven entirely by pricing and FX with flat underlying volume and margin pressure in North America. The renewed focus on faster product cycles and more differentiated formulations is aimed at reinforcing Colgate’s already strong oral care market shares (41.4% in toothpaste, 32.2% in manual toothbrushes) and defending its brand moat. Management is effectively using its flagship Colgate Total brand as a platform for premiumization and scientific claims that can translate into better mix, while absorbing higher innovation and marketing spend through funding-the-growth efficiencies. However, until these initiatives translate into sustained positive volume growth and margin improvement, the stock’s current valuation premium to our DCF base case leaves limited room for error.

Implication

For investors, the key near-term question is whether the Colgate Total relaunch and stepped-up innovation cadence can turn flat volumes into consistent positive growth without eroding margins through higher promotional and A&P spend. If the initiative delivers sustained volume gains and stable or improving category share over the next 12–18 months, it would strengthen the case that Colgate’s brand moat can still support mid-single-digit organic growth and justify a higher intrinsic value. Conversely, if volumes remain sluggish despite the relaunch, the narrative shifts toward structural demand or competitive issues rather than simply an innovation timing gap, which would argue for a more cautious view at today’s valuation. Investors should monitor reported volume trends by region, oral care market share data, A&P as a percentage of sales, and segment margin trajectories—particularly in North America where profitability has already been pressured. Given that shares still trade well above our DCF base case, the risk/reward remains skewed toward waiting for clear evidence of volume and margin traction before adding exposure, while existing holders can reasonably maintain positions and reassess as early launch data comes through.

Thesis delta

The article reinforces, rather than changes, our core thesis that Colgate’s moat is anchored in science-led innovation and brand strength, with management now leaning even more visibly on these levers to address soft volumes. We see a modestly more constructive setup for medium-term volume recovery if the global Colgate Total relaunch executes well, but this remains an execution story with limited hard evidence so far. As a result, our overall rating and valuation view remain unchanged at HOLD, with a slightly higher emphasis on tracking early volume and share outcomes from the relaunch as potential catalysts for a future upgrade or downgrade.