After a strong quarterly performance, Colgate-Palmolive (NYSE:CL) investors now have one more reason to cheer. The company’s announcement of a strategic-tie up with Japan-based technology company Omron signals Colgate’s intent at anchoring itself ever more firmly in the growing market for Oral Care products worldwide.
Colgate-Palmolive, a giant in the world of consumer goods, draws around 40% of its stock value from Oral Care products. The importance of the company’s Oral Care business was emphasized by the latest quarterly result, as a strong performance by the division buoyed company-wide organic sales by 5%. Most of this growth was fueled by the company’s strong expansion in developing regions such as Asia and Africa.
The partnership will focus primarily on innovation, such as designing new lines of electronic brushes for fueling demand among consumers in both developed and developing regions. Both partners are expected to bring their respective strengths to the alliance – Omron brings with it the technical expertise that will make new designs possible, while Colgate-Palmolive will bring an in-depth knowledge of consumer trends as well as marketing expertise.
This deal suggests Colgate-Palmolive shows no sign of letting up in its pursuit for the most lucrative markets of the future – Brazil, Russia, India and China. Even as competitors such as Procter & Gamble (NYSE:PG) close in on them in these geographies with new product launches of their own, we expect the company’s focus on innovation and marketing to help it drive market share worldwide.
We currently have a Trefis price estimate of $105 for Colgate-Palmolive, which is in-line with the market price.