Colgate-Palmolive Company (CL)

Colgate's strategy of raising prices on its brand products will hurt the company in a competitive environment when rivals such as Unilever and P&G have cut prices 4%-25%. Unilever has increased the volumes and weights of some of its products, effectively lowering unit prices. According to Indian analysts, there is no reason for the company to be hiking prices when commodity costs are relatively stable. In addition, many consumers are trading down to private label products and a price increase will only decrease the attractiveness of Colgate's products.

Colgate's wide lead in emerging markets and its high operating profits leaves plenty of rooms for multinational (i.e. cash-rich Procter & Gamble) and local competitors which can quickly take marketshare.

Ultimately, there may be a limit to the amount of times that you can reinvent toothpaste. Colgate does not have the same product exposure as its competitors. The dominance of a few product types such as toothpaste makes it heavily dependent on rebranding and brand extensions.

Colgate is overly-dependent on Latin America which has been the company's prime growth engine in recent years, contributing 40% of organic growth. Maturing and increasingly saturated Latin American markets will hardly be able to keep pace with past growth.