Business
P&G Is Running Out of Room to Raise Prices. Can It Win Shoppers Back?
Consumer Strategy
By Rhea Lobo
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Procter & Gamble spent years coasting on price hikes. Now it's trying to remember how to earn a sale.
For all of fiscal 2026, P&G reported volume growth in just one out of four quarters. That's the structural wound hiding behind the company's 2% net sales gain.
Revenue grew because of currency effects and rounding, not because shoppers bought more. Organic sales, the number that strips out currency noise, were flat.
The post-pandemic playbook was simple: raise prices and let brand loyalty do the rest. Schulten acknowledged that in the post-Covid period, 100% of P&G's growth came from price.
That model has a ceiling, and P&G has hit it. Shoppers are now buying smaller pack sizes, stretching products longer, and rotating toward store brands.
The consumer split isn't helping. Higher-income shoppers still reach for premium SKUs and new launches. Lower-income shoppers, living paycheck to paycheck, are rationing. Neither group is buying more units. The result is a company whose best brands hold recognition but can't convert that into volume.
Then came the Iran war. P&G is absorbing roughly $1B after-tax in higher raw materials, energy, and transportation costs in fiscal 2027. Guidance assumes Brent crude holds around $90 a barrel. That's an 8% headwind on earnings per share baked into an already soft outlook.
The bet P&G is making is straightforward: rebuild volume by pairing media investment with product innovation, rather than leaning on price alone.
Schulten said plainly that the company will return to a model where both price and volume contribute to growth. That's a meaningful shift from the past three years.
Beauty is the clearest proof point so far. The segment posted 3% volume growth in the fiscal fourth quarter and 4% organic sales growth, the best result across all five divisions.
Pantene, Olay, and SK-II led the gains. Fabric and home care, which includes Tide and Swiffer, was the only other segment to post positive volume, up 1%.
China offers a more granular example of what the reset looks like in practice. P&G grew share in China for the first time in 15 quarters, not because sentiment improved, but because the company rebuilt its distribution network, streamlined its brand portfolio, and overhauled its media model toward social content.
Two segments growing volume, one international market inflecting, and a CFO signaling a strategic gear shift don't add up to a full reversal.
The next test will be media. Schulten flagged that P&G plans to increase media spending as the landscape grows more fragmented, with shopping agents and AI-powered search changing how consumers discover products. That's a new variable the old model never had to solve for.
If shoppers increasingly find products through algorithmic recommendations rather than aisle placement or TV ads, brand equity alone won't move units.
P&G's ability to show up in those new discovery surfaces, and to measure whether it's working, is the capability gap that fiscal 2027 will start to expose.
The company that built its second act on pricing power now has to prove it can build one on something harder to replicate.
