Analysis: Colgate-Palmolive optimistic about Hill’s amid shift from private-label sales

According to Colgate-Palmolive’s Chief Investor Relations Officer John Faucher, Hill’s Pet Nutrition is slated to return to its 3% to 5% target growth rate.

Speaking at the UBS Global Consumer Retail Conference in New York, Faucher described the multinational’s overall strategy and touched on the success of the Hill’s brand.

Overall, he says the corporation boosted its figures when they leaned into segments of their categories where they knew they were “under-indexed,” including niche prescription diets as part of the Hill’s brand.

Hill’s has managed to maintain earnings growth despite negative impacts from a decline in private label sales, a sector the brand is leaving behind in 2025.

Economic headwinds

Faucher says the pet nutrition segment has struggled to adapt to rapidly changing demand since COVID-19. At the pandemic’s start, demand for pets and pet supplies skyrocketed, creating an opportunity for many pet companies.

“The business had grown so quickly in 2020 through 2022 that we didn’t have the capacity to feed the demand,” he states.

That demand has cooled alongside household formation and pet intake because inflation has caused limited spending. Decreased household formation, Faucher says, has impacted demand for dogs and, in turn, for premium, nutritious dog food.

However, Faucher expects household formation to pick back up in the long term, implying that demand could come back. He is uncertain whether that demand will return in the next 6 to 12 months but believes that long-term trends will buoy the brand’s growth.

“There’s nothing that makes me think that we’re going to see people turn away from having pets longer term,” he adds.

Trends and growth opportunities

Colgate-Palmolive aims to grow Hill’s Pet Nutrition’s household penetration. “Colgate is the single most penetrated brand in the world,” Faucher notes. “And it’s in about 60% of the world’s homes. Hill’s… has about 6% household penetration in its best market, which is the US. So there is a huge opportunity to grow household penetration, to grow market share on Hill’s.”

Capacity expansions are set to help enable that growth. The company has invested in a number of facilities designed to increase output and the capacity for innovation at Hill’s. As demand rose in 2022, the company invested in several factories.

Faucher also remarks that the Hill’s brand is strong. “We’ve invested aggressively behind the business to build up brand awareness, to build that penetration and really drive the awareness of that innovation that we have,” he adds.

“So I feel like right now, even though the category is a little softer than we would like it to be, the structure of where the brand is and where the business is, is by far the best in the time since I’ve been at the company, if not for a longer period of time.”

He also echoed Chairman, President and CEO Noel Wallace, who told the Consumer Analyst Group of New York (CAGNY) conference earlier in March that the company was eyeing expanded production in its wet cat food and small dog food offerings.