Strong brand image
Clorox (CLX) commands a strong portfolio of brands that are either category leaders or have substantial market shares in their respective categories. For instance, in the bleach and charcoal category, its namesake brand and Kingsford remain market leaders. Meanwhile, the company holds a significant amount of the market share in the trash bags space with Glad.
The company’s focus on brand building through marketing and innovative product offerings is paying off. Clorox’s foray into the digital arena to drive consumer engagement represents yet another positive step in this direction.
The chart above shows how the company plans to invest about 45% of its media spending in fiscal 2017 on digital media, which should accelerate growth and increase its household penetration.
Clorox gaining household penetration
One of the company’s key focus areas is household penetration rate growth. At the CAGNY (Consumer Analyst Group of New York Conference) held on February 22, 2017, Clorox’s management stated that the company’s focus on increasing the household penetration of its brands is gaining momentum, as about 77% of its brand portfolio is witnessing a growing or stable household penetration rate. This number was 31% about three years ago.
At the CAGNY conference, CEO (chief executive officer) Benno Dorer further noted that 100% of Clorox’s growth brands (such as Burt’s Bees and Hidden Valley) are witnessing increased household penetration. That number has risen from 91% of the portfolio one year ago. Meanwhile, more than 50% of the fuel brands portfolio (including Kingsford) witnessed an uptrend in penetration rate.
The company’s namesake brand, Clorox, has seen its penetration rate improve by about 2% over the past year. The brand has added about 1.25 million new households in the US (SPY) over the past year.
Notably, Clorox constitutes 0.70% of the iShares US Consumer Goods (IYK).
In the next part of this series, we’ll discuss Clorox’s dividend growth.