Hill's Pet Softness Driven by Macro Trends; Colgate-Palmolive Sees Q2 2026 Share Gains

Colgate-Palmolive (Hill’s) Pet softness: what’s driving it, Hill’s positioning, share-gain durability, and Prime plans (next couple of years) including pricing

1) What explains the softness in the Pet category?

Management describes the softness as primarily driven by broader category dynamics and macro/consumer pressure, not by a deterioration unique to Hill’s. In the U.S., they point to heightened pressure after May peak gasoline prices and the knock-on effect on consumer confidence, with the category rebounding in June and into July but still below historical levels. ¹ They also note that retailers adjusted inventories downward as the market softened in May, which contributed to shipment/flow noise during the quarter. ¹

They also acknowledge that the category has bottomed out but expects continued pressure if U.S. inflation persists, even while their opportunity set in under-indexed segments remains attractive. ²

2) How Hill’s is positioned within the category softness

Hill’s is portrayed as outperforming the category during a tough environment, with growth better than the market and across multiple segments.

• Hill’s delivered solid organic growth in a tough market, specifically 4% organic growth ex private label, contrasted against a category that is “more or less flat right now” (U.S. ~flat/“more or less flat” and global context). ³
• In the U.S., they cite Hill’s continuing to grow at ~4% even as the overall environment is described as softer. ³
• They attribute the strength to execution in segments Hill’s is focused on—cat, wet, and small paws—and to therapeutic growth that continues to rise “very, very nicely.” ³
• They also highlight a margin-supporting mix and improvements linked to the therapeutic business, including volume and pricing growth there. ³

Strategically, management ties Hill’s positioning to its brand model: science-driven nutrition and demand creation through the vet/professional channel, with a “slow and thoughtful build” rather than heavy shelf-and-advertising approaches. ⁴

3) Can Hill’s share gains continue?

Based on the transcript, management’s answer is essentially yes, but with the expectation that the category remains volatile, so the emphasis is on continuing to execute rather than declaring the gains are guaranteed.

What supports potential continuation:

• Hill’s is explicitly described as “performing well from a share standpoint” despite the softness. ⁵
• They state that “market shares continue to grow” and that they had “good market share performance” in the segments they focus on. ⁶
• They emphasize they are stepping up advertising and expecting to further expect support in the back half of the year to accelerate category growth—a key lever for share maintenance/advancement. ³

What could limit/complicate continuity:

• They stress the category is still pressured and U.S. demand is not at historical levels even after rebound from May. ¹
• They anticipate choppy conditions and are not planning around retailers “loading up” inventory again; instead they focus on consumption and execution they can control. ⁷

On balance, the transcript supports the view that share gains are currently being driven by execution and segment momentum, but their tone on the category suggests continuation depends on sustained execution amid ongoing volatility. ⁶⁷¹

4) Ability to continue realizing pricing in Pet

Management directly ties pet organic sales growth (even after adjusting for private label disruptions) to pricing and discusses their stance on how that pricing should be managed going forward.

• They state that pet organic sales growth… is really pricing that drove the organic sales growth, even after adding back private label discontinuations. ⁵
• Hill’s pricing discipline is embedded in their brand model: they “charge a premium price” because their differentiation is science-driven and professionally backed, and they emphasize respecting this model (including the implication that premium pricing is part of the brand’s value proposition). ⁴
• They also frame the operational challenge around ensuring they are not taking pricing/promotion “further down” into uncompetitiveness. In a related discussion about pricing gaps, management says they identified selective price gaps in certain retailers/categories and will address them prudently, but “we can’t be uncompetitive in terms of pricing and promotion.” ⁸

So, while they confirm pricing has been the main engine for organic growth, they also indicate they will manage price/mix carefully rather than chase volume with aggressive discounting, consistent with their premium science/professional approach. ⁵⁴⁸

5) Prime plans over the next couple of years + what that implies for pricing in Pet

Prime business: current momentum and what management learned

Management says Prime is already working in Australia, with Prime business continuing to do very, very well and being up nicely in the quarter on top of significant growth in Q1. ⁶

They also say their key advancement for the next phase is that they’ve learned “an immense amount” about the Prime launch, particularly around the manufacturing process of delivering high-quality, consistent fresh products—and that these learnings are being built into the U.S. “fresh” rollout. ⁶

The next-couple-years execution approach: thoughtful, brand-building, professionally driven

For the U.S. rollout, management repeatedly emphasizes a methodical and branding-first approach, not a “full speed ahead for volume” strategy:

• They say the launch is “very thoughtful” and not looking to generate significant volume right now; instead it is intended to build the brand and underscore the science-driven nature of the products. ⁶
• They describe demand creation as professionally driven, focusing on getting the profession to underscore quality/efficacy; they describe building demand through the profession and being “very thoughtful and methodical”. ⁹
• They explicitly say the brand build is slow and thoughtful and that manufacturing complexity requires phasing and consistency; the professional channel and specialty retail are used, and rollout is phased “through the balance of this year.” ⁴

Pricing implication for Prime / Pet

The transcript does not provide numeric pricing targets for Prime or specific dollar-level pricing guidance. However, it does provide the directional pricing philosophy for Hill’s/Pet:

• Hill’s charges premium pricing as part of its science/professional differentiation model. ⁴
• For Prime/fresh, management’s approach is similarly anchored to quality consistency, science rationale, and professional endorsement, and they emphasize not chasing volume early—an approach that typically aligns with maintaining premium positioning rather than aggressive promotional pricing. ⁶⁹

They also tie the manufacturing/launch approach (fresh alternative anchored on single proteins) to an efficacy/nutrition rationale—again implying premium credibility rather than cost-led pricing. ⁶⁹

Overall “plans over the next couple of years”

From the transcript, the “over the next couple of years” plan is best characterized as:

• Scaling the Prime/Australia proof case and U.S. fresh rollout through learned manufacturing consistency. ⁶
• Rolling out multiple single-protein diets (3 single protein diets launched) and phasing them out, with a “thoughtful launch” rather than volume-first scaling. ⁶
• Using the professional channel as the demand engine and maintaining Hill’s science/professional core messaging even while introducing fresh. ⁹⁴
• Expecting more to be discussed later in the year, suggesting continued development and rollout milestones rather than a one-time launch. ⁶

Bottom line

• Category softness is attributed mainly to U.S. consumer/macro pressure (peak gasoline confidence impact in May) plus retailer inventory corrections, with partial rebound later in the summer but still below historical category levels. ¹
• Hill’s is positioned as an outperformer, with ~4% U.S. growth and 4% ex private label organic growth while the category is described as around flat; growth is concentrated in cat, wet, small paws, and therapeutic, supported by pricing and mix. ³
• Share gains appear supported for continuation by strong segment execution and continued advertising support, though management cautions that the category remains volatile and retailers may not revert to old behavior. ³⁶⁷
• Pricing has been the key driver of Pet organic growth, and management signals pricing discipline—fixing selective gaps without becoming uncompetitive or undermining the premium brand model. ⁵⁸⁴
• Prime/fresh over the next couple of years centers on manufacturing learning-to-scale, phased U.S. launch, and professional/demand-building rather than early volume, consistent with a premium, science/efficacy anchored positioning (though the transcript does not provide explicit Prime price levels). ⁶⁹⁴