The Colgate CEO stated last week at an industry conference that the household goods maker sees its new Optic White Pro Series toothpaste as the type of premium product “vital” to its ability to raise prices, which will help drive profit growth this year. His remarks come when many consumer products companies are hiking prices as much as they can to offset their own rising costs, a trend that could continue due to the conflict between Russia and Ukraine, whose economic risks include driving up gasoline prices.
“We’re seeing significant price hikes on virtually all item consumers purchase,” said U.S. Representative David Cicilline in a recent interview, who is working on proposed antitrust legislation aimed at bringing down prices. “They’re imposing real hardships. People are taking things out of their grocery carts because it’s too expensive.”
So far retailers and consumers seem largely unfazed by higher prices, but some lawmakers and consumer advocates argue that companies are excessively raising prices to fuel profits and return money to shareholders.
The U.S. Federal Trade Commission over the last three months has probed sky-high prices and supply chain disruptions, requiring companies including Procter & Gamble, Kraft Heinz, Kroger, and Walmart to turn over internal documents on profit margins, pricing, and promotions.
In the recently mentioned interview with Cicilline, the Congressman cited Colgate as an example of a company touting price hikes, making basic items too costly, and paying out more to investors. Colgate expects its margins to widen this year, due in part to higher prices. It also bought back almost 50% more shares last year, a boon for investors. Raising prices is a “key capability” for Colgate that will help drive profit growth, Wallace said last week.
A Colgate spokesperson said in a statement that the company has a wide portfolio of products at different price points and touted its new $10 toothpaste as the first with 5% hydrogen peroxide, with “demonstrated efficacy to whiten teeth.”
The White House is targeting corporate profits as it grapples with inflation. Bharat Ramamurti, deputy director of the White House’s National Economic Council, said there are examples of companies outside of the meatpacking industry — which has particularly been in the White House’s crosshairs — increasing prices beyond their own climbing costs.
Kimberly-Clark’s margins took a hit in 2021 due to rising costs. The maker of Huggies diapers is betting that consumers will buy pricier options made with plant-based material, helping its profits recover, executives stated at a recent conference. P&G executives said last week that they expect margins to continue to improve as higher prices hit stores. The company also announced that it plans to buy back more stock than it originally intended.
“There is incredible appetite for our products,” a spokeswoman for the Consumer Brands Association, a trade group for consumer-packaged goods companies including Colgate, stated to the press recently. “We make essentials. And there is no option of not delivering.”
Source: Brookfield Brief