Church & Dwight Co., Inc. (NYSE:CHD) Q4 2023 Earnings Call Transcript

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Those are launching starting now in Q1, both forms. And we think they’re pretty futuristic. So we’ve engaged some help from the future to tell the story about this new product. Let’s play the spot. [Video Presentation] So I have a lot of fun with BATISTE, as we approach a 50 share in the category and keep innovating and investing. VITAFUSION. It’s a slightly different story when we talk about VITAFUSION vitamins. So once made VITAFUSION unique, our gummy form, our great taste, our wide assortment has now become really prevalent in the VMS category. There are over 60 vitamin players in the gummy form right now, and that’s just in bricks and mortar. There are over 100 if you were to look at online players. So ultimately, there’s been a share decline, but you’ve seen it’s gone from 23.9% down to 12% in the category.

The gummy category has just about doubled during that time, and you see a real inflection back in Q4 of 2019 and Q1 of 2020 during COVID. But obviously, the share decline is going to stop. And we’re making the investments required to do just that because our consumers and our customers depend on us to do that. We’re the number one gummy player still Amazon, at Walmart, at Walgreens and all the players you see listed here. And we’ve got the highest household penetration in the gummy form. But we’ve got to turn it around. And so we’re investing in new product upgrades, to our base formulas, to new packaging that pop better at shelf. We’re taking that new packaging into new displays to get off-shelf display. We’ve got new advertising to support it.

And we’re launching new forms beyond gummies in 2024 with the whole goal of stabilizing the business, stopping that share decline and getting back to growth in 2025. Now I’m going to close out talking about just a few acquisitions. So I’ll start with THERABREATH, and I think this THERABREATH story is pretty well known. 85% growth last year, right? Incredible growth, driving category growth of 12.8%. So healthy category, again, driven by THERABREATH where we’re now category leaders. And you can see the share growth is absolutely playing out. This is in the total mouthwash category. We’ve gone from a 2 share to a 13 share in the alcohol-free portion of the category where we play, 26 share category leader. And actually a fun fact in January, alcohol-free for the first time is larger than the alcohol segment of the mouthwash category.

So we are continuing to gain share and grow dramatically here. And it’s a similar story where we’ve got a great new product, introducing THERABREATH Deep Clean, our first alcohol-free antiseptics and antiseptics 30% of the category today, we don’t play there at all. Deep Clean is our first foray there. Kills 99% of germs with no burn because there’s no alcohol and it’s dentist-formulated launching in Q1. I don’t have any great advertising to share with you here because the team just got back from LA last night, but we’ll have it for those of you who are going to be at CAGNY as it supports our launch in Q1. And last but definitely not least is a little brand called HERO. And it’s not so little anymore. You can see that it’s absolutely driving category growth.

We’re up 72% last year, drive category growth of 20%. And when I say little, it was at 0.2 share five years ago. Right now it’s an 18 share all-time category, high-end category leader in acne care. And we’re absolutely keeping it going innovation in both our patch form. We’re a leader with over a 50 share today. And in acne-adjacent skin care, where we’re launching Dissolve Away, our Daily Cleansing Balm. So patch innovation, combined with skin care innovation equals lots of good growth yet to come. So let’s talk about patches for just one more second because the form is still not all that well known in the US. We’ve got the first national campaign called pimple — your MIGHTY PATCH bringing awareness to this great new form, let’s play that spot.

[Video Presentation] Again, the form is new so we’re pioneering in the industry, launching the first new advertising nationally to bring awareness to this forum. So the summary is great momentum, right? You heard about all-time share highs in laundry and cat litter, on BATISTE, in mouthwash and in acne care. We’ve got great new products. We’re supporting with more advertising. And ultimately, that brings us back to the algorithm that we were talking about earlier. You see we’ve raised our target to 3% for the US. And we’re absolutely confident we can achieve that. seven out of the last 10 years, our US business has been growing faster than 3%. And we’re absolutely committed to continuing to do that going forward. One way we’re doing that is via digital and e-commerce.

And so Surabhi Pokhriyal is going to come up now to talk about how we’re going to keep that great growth going. Thanks.

Surabhi Pokhriyal: I’m Surabhi Pokhriyal, I’m the Chief Digital Growth Officer here at Church & Dwight. So quick context setting because I know all of us are consumer goods users but not always fancy. Some geeky things might happen here, so keep me honest as I present to you. I want to say that we are not in the business of getting consumers to shop online. We are simply in the business of being where the consumer shops, and that happens to be online more often than not. With that said, 70% of purchases in the US specifically are digitally influenced. What that means is every time you pick up that six-inch device out of your pocket, look up your iPad, you are making purchase decisions not just to buy online but walk to the store, look up a review online and make that purchase.

That’s what digitally influenced means. Also, we are in the era of channel-less commerce. So the consumer is very fluid between buying in brick-and-mortar store, buying online or making that 2 a.m. order to get the product delivered to the door, maybe sheet. So it’s important to segregate how the physical shelf is very different from the digital shelf. The physical shelf is set once a year, maybe twice a year and it is set it, forget it. The digital shelf like this time-lapse video shows you changes by the second. So our tactics really have to cater to the online world in a very different manner. Let’s talk some numbers, and Matt broke the thunder for me. We go from 220 in under seven years, right? That’s the kind of e-commerce penetration we are seeing for our categories.

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