Procter & Gamble Co PG

Procter & Gamble Is Counting on Productivity Improvements to Fuel Further Brand Spending

Tempered sales have characterized the last few quarters for wide-moat Procter & Gamble, with the firm posting flat to low-single-digit organic sales growth in each period, lagging the mid- to high-single-digit marks that had characterized the business not that long ago. This was initially a byproduct of more muted price increases (the low-single digits, down from 7% in the first quarter of 2024). 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 beginning just more than 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 consumers). We believe P&G’s strategic aims—investing in product innovation and marketing to support its portfolio of daily-use, essential offerings—should help its brands maintain their clout with retailers and consumers, reinforcing its wide moat over the long term.