Like a melodious epic, it records the vicissitudes of two centuries. $Colgate-Palmolive (CL.US)$ 's rise and fall have witnessed the great changes of two centuries.

From a small workshop of the son of an impoverished immigrant, to the absolute leader in the global toothpaste market, today Colgate-Palmolive sells its products in more than 200 countries and regions, occupying 42% of the toothpaste market share, with the second-largest market share in the industry at 15.1%.

Its unique 'generous' gene, and the history of maintaining good deeds in the waves of business, have become its sharpest weapon to conquer the world.

This business legend, full of wisdom and regrets, is worth pondering.

01 The Art of 'Generosity'

Many companies become world-class companies because of amazing wealth accumulation abilities, but Colgate's success stems from the company's strong "dispersion of wealth" genes.

In 1789, the U.S. Constitution officially took effect, George Washington became the first president, and the United States was founded. Six years later, because of his support for the independence of the colonies, William Colgate's father, 8-year-old William Colgate, was persecuted by the British authorities.

His father brought his family from England to the United States, settled in Batimore, and barely made a living by farming.

The clever and intelligent William Colgate helped his parents work from an early age. Due to his poor family, he never went to college, but his mother's generosity in helping those in need, as well as the teaching of "one cannot be too selfish in life, only by benefiting others can one benefit oneself," became his life creed.

In the late 18th century, Batimore was an important port and commercial center in the United States, and also one of the important hubs of trade along the Atlantic coast. In the strong commercial atmosphere, his father and friends opened a factory producing soap and candles.

Unexpectedly, what they encountered was not an improvement in their days, but the departure of partners and the closure of the factory.

Seeing his father in depression all day, William Colgate was determined to revive the family business. At the age of 19, with the support of his aunt, he produced soap under his own name, but unfortunately, the business also failed.

In 1803, William Colgate decided to make a name for himself in New York.

On the morning of departure, my mother said to him to be a kind person; to adhere to his beliefs; to give back ten percent of his income to society, because that wealth is not his, but a gift from society; be sure to ensure that every piece of soap is of sufficient weight.

He found a job at the Schmierl Soap Factory and volunteered to work in the dirty and hard workshop. Here he closely observed the employer's management methods and learned lessons from poor management. After three years of hard work, Colgate learned the technology of making soap and mastered the skills of factory operation and employee management.

In order to become self-reliant as soon as possible, he saved every penny and still generously donated ten percent of his salary to the church.

In 1806, he resigned and established Colgate-Palmolive Company at No. 6, Hoogstraat. He made and sold soap and candles by himself, working as a laborer, salesman, bookkeeper, and delivery person. He operated the business with integrity in accordance with his mother's instructions and donated ten percent of the profits to society.

In an industry that was filled with fraud and substandard products, Colgate's products quickly gained the trust of consumers. He survived the difficult early days and expanded the product line to include starch manufacturing, hand soap, and shaving soap.

In 1817, Colgate's first advertisement appeared in a newspaper in New York. The company's profits soared, and Colgate quickly became one of the wealthiest businessmen in New York. The amount of profits donated to society increased, and unexpectedly, Colgate even increased his donation proportion.

2/10, 3/10, 4/10, 5/10... For the religiously fanatic Colgate, his generous donations did not ruin the company, but instead brought about the flourishing of his business.

However, after 20 years, a 'little brother' emerged and quietly changed everything.

02 Counterattack and Another Failure

In 1837, 31 years after the establishment of Colgate-Palmolive, Procter & Gamble was born.

"Panic of 1837" marks the beginning of a 6-year economic recession in the United States. Procter & Gamble launched more affordable and efficient products, as well as marketing activities such as discounts and promotions, through strict cost control and new product development, and rose strongly in the economic crisis.

In 1857, William Colgate passed away, and at that time Colgate's cash cow was still the soap business.

After his death, his son Samuel Colgate took over the management of the company. Under Samuel's leadership, Colgate started its perfume soap and perfume/fragrance business.

In 1873, Colgate introduced the first aromatic toothpaste packaged in a glass bottle. However, due to high packaging costs and inconvenience in use, it did not capture a share of the tooth powder market.

In 1881, Procter & Gamble launched the "Ivory" cleansing soap, which almost shook the foundation of Colgate's traditional business under the strong marketing of the company. In 1890, P&G established the first corporate research and development center in history, driving innovation for the company.

Colgate-Palmolive, who was at risk of being overtaken in all aspects, finally ushered in a turning point.

A US doctor, inspired by tubing paint, produced collapsible tube toothpaste, which immediately caught Samuel's attention. When the machines at Colgate-Palmolive factory started rumbling to produce this toothpaste, the fate of the conglomerate quietly changed.

In 1893, the world's first tube of toothpaste was born from the United States Colgate-Palmolive Company. Colgate-Palmolive's main business shifted from soap to toothpaste, firmly standing at the forefront of the toothpaste industry and squeezing out "gold" from toothpaste.

In 1896, Samuel hired chemist Martin Ittner at a high salary to establish a research team, diversifying the company's products. The following year, Samuel passed away, and the company was jointly operated by his five sons, becoming a joint-stock company.

In 1900, Colgate-Palmolive won the highest honor at the Paris World Expo with its exquisite soaps and perfumes.

However, that year, Procter & Gamble became one of the largest soap and candle manufacturers in the United States. Over the next thirty years, through studying the preferences of different consumers, Procter & Gamble sold over thirty types of soap, forming the embryonic form of a multi-brand strategy. The company's management also became institutionalized and standardized.

In 1928, Colgate-Palmolive was sold to the Palmolive-Peet company (a merger of the Palmolive and Peet companies, reportedly privately owned by the Colgate-Palmolive family). Three of the oldest and largest soap and perfume companies in the United States merged like this, with total sales exceeding 0.1 billion dollars before the merger. After the merger, Colgate-Palmolive-Peet had 7 manufacturing plants in the US, factories in 14 countries, and went public on the NYSE in 1930.

The merger made Colgate-Palmolive-Peet the leader in the US cleaning products market. However, Procter & Gamble, not willing to be outdone, kept stirring the market's waters, attempting to dethrone them.

In 1937, just as television advertising, a new marketing method, was emerging, Procter & Gamble seized it tightly, giving rise to the "soap opera." At the same time, facing channel reforms brought by chain stores and department stores, Procter & Gamble quickly changed its previous sales model of grocery stores and wholesalers, embracing channel transformation.

Colgate-Palmolive also joined the soap opera sponsorship competition, but unfortunately, a series of actions by Procter & Gamble made it almost powerless to turn the tide.

Procter & Gamble, which has the upper hand in marketing and distribution, launched Tide laundry powder, a king product, after World War II. With the popularity of washing machines, it took away thousands of soap users from Colgate-Palmolive. At the same time, Procter & Gamble grew rapidly through large-scale acquisitions and global expansion.

In 1955, Procter & Gamble became the first company to introduce fluoride toothpaste worldwide, once again taking the throne of the toothpaste market from Colgate-Palmolive.

In the 1960s, Colgate-Palmolive struggled under the shadow of Procter & Gamble.

Procter & Gamble's Tide laundry powder beat Colgate-Palmolive's Fab in a 5:1 ratio; Colgate-Palmolive's soap is now far behind Procter & Gamble's; Procter & Gamble's dishwashing liquid has twice the market share of Colgate-Palmolive's. In the public's mind, Colgate-Palmolive has become synonymous with inferior soap and laundry powder.

03 Indirect Attack

Colgate-Palmolive needs a victory.

In 1962, Colgate-Palmolive opened a research center in Piscataway, New Jersey. In 1968, Colgate-Palmolive launched toothpaste with MFP fluoride, which can protect teeth more effectively and reduce cavities.

However, Colgate-Palmolive did not turn the tide until 1971, when David Foster took over the company.

After a series of pre-war investigations, Foster found that at the retail level, Procter & Gamble still had more than 3 times the advantage, and Procter & Gamble's researchers were also three times that of Colgate-Palmolive. Throughout the 1970s, P&G's Pampers diaper market share reached an astonishing 92%.

With the enemy being strong and us being weak, a direct attack is clearly hopeless.

Foster decided to lead the team to adopt a flanking tactic, utilizing their unique technological advantage, bypassing competitors, attacking easier markets to expand their resource base.

First, strengthen Colgate-Palmolive's leading position overseas. In the toothpaste sector, with Crest backed by P&G having an absolute advantage in traditional retail channels, how did Colgate-Palmolive establish its leading position? Due to better medical effects, Colgate-Palmolive aggressively attacked P&G's Crest in community and hospital channels where P&G was not good at, by perfecting its product lineup, selling toothpaste based on pharmaceutical standards.

In this way, Colgate-Palmolive successfully occupied the core channels of the overseas oral care field, and established its authority in the oral care field. Similar to Haitian Soy Sauce holding the commercial channels, Colgate-Palmolive occupying the community and hospital channels had its own 'ace card'.

Secondly, diversify domestically, enter markets where P&G has not entered, outflank P&G. Diversify the operation of unrelated products domestically, enter new regional markets with existing products for diversification, develop new technologies to replace existing products.

Colgate-Palmolive acquired companies in textiles, pharmaceuticals, cosmetics, sports equipment, food, hair care products, pet nutrition, and more. By 1979, Colgate-Palmolive gradually grew into a conglomerate with annual sales reaching as high as $4.3 billion.

Hangzhou First Applied Material, with full wings, decided to launch a positive attack on Procter & Gamble in order to gain more market attention. In 1989, Colgate-Palmolive's annual sales exceeded 5 billion dollars. Since then, it has launched acquisitions in core areas such as cleaning and oral care around the world, directly challenging Procter & Gamble.

Taking the Chinese market as an example, Colgate-Palmolive did not adopt a comprehensive strategy in China, but instead started with free sample giveaways in Hong Kong, covering almost all households. Because of the free giveaways, Hong Kong residents, whether they like it or not, used Colgate-Palmolive.

The giveaway activity caused reports in local newspapers and television in Hong Kong, and the mainland newspapers followed up. In this way, using Hong Kong as a bridgehead, people throughout China knew Colgate-Palmolive with the loud slogan "Our goal is no cavities!".

In the field of oral care, Colgate-Palmolive, which has achieved remarkable results, completed the enlightenment of oral hygiene for many people by virtue of its sharing and feedback awareness in its genes, thereby easily capturing the market. This "gentle knife" crafted through the sharing gene allowed Colgate-Palmolive to easily open up the market and dominate.

However, as Colgate-Palmolive stepped up its attack on Procter & Gamble, new problems began to plague it.

Through continuous acquisitions and expansion, Colgate-Palmolive's business is present in more than 200 countries, with 70% of sales in the international market, and 80% of employees located overseas. The enormous business system and decentralized organizational structure have made Colgate-Palmolive's institutions bloated, running costs extremely high, and slow to respond to market changes.

In the mid-1990s, despite reaching a new level of revenue, Colgate-Palmolive faced a new crisis, as sales of personal care products in North America declined by 12%, and operating profits fell by 26%.

The application of new technology to solve corporate management problems, reduce product delivery cycles, and lower operating costs is becoming more urgent for Colgate-Palmolive, allowing it to have an integrated business environment and standard business processes.

Colgate-Palmolive began the digital transformation of its supply chain in 1995, integrating the supply chain of 80 countries and the distribution systems of 200 countries. The company shortened the product delivery cycle by 60%, reduced inventory, and increased profitability.

The cost savings were invested in the development and promotion of new products, including the successful development of the Target toothbrush, which regained the number one position in the American toothbrush market that was lost more than 30 years ago.

In recent years, Colgate-Palmolive's oral, personal, and home care division has accounted for the vast majority of its total revenue and is the company's main source of income. At the same time, its pet nutrition segment has achieved an average growth rate of 11.7% over the past 6 years, with promising prospects.

In 2022, Colgate-Palmolive's total revenue was $17.967 billion, which is still far behind Procter & Gamble's $80.187 billion in revenue. However, the impressive battle allowed it to maintain its position as the leader in the toothpaste market, and this operation is still very commercially inspiring.

Editor/Somer