Decelerating Sales Growth at Wide-Moat Procter & Gamble Fails to Signal an Eroding Brand Position

For the first time in more than 20 quarters, Procter & Gamble posted just 3% organic sales growth in its third fiscal quarter, lagging the mid- to high-single-digit marks that have more recently characterized the business, primarily on the heels of less price contribution (3%, down from 7% in the first quarter). However, we don’t believe this suggests cracks in the firm’s competitive prowess. After rightsizing its category and geographic reach by shedding around 100 brands about 10 years ago, P&G also embraced a more holistic approach to brand investing (consisting of how a product performs, the packaging, brand messaging, execution in stores and online, and the value a product offers its retail partners and end consumers). In this context, we think P&G’s strategic aims—investing in product innovation and marketing to support its portfolio of daily use, essential offerings—should ensure its brands maintain clout with retailers and consumers, ultimately supporting its wide moat over the long term.