P&G CFO says pricing power is no longer a given—here is how the company plans to earn it

(SeaPRwire) –   Good morning. For almost 200 years, Procter & Gamble, the maker of Dawn dish soap, Tide detergent, Pampers diapers, and Gillette razors, has offered consumers a core guarantee: its products merit a higher price. The company’s longstanding argument is that superior performance warrants the extra cost.

However, following years of sustained inflation, shoppers have become more conscious of price, more inclined to shop around, and less automatically brand-loyal. In this environment, P&G’s strategy is shifting.

“I don’t believe we’ve lost pricing power,” stated P&G CFO Andre Schulten during the firm’s fiscal third-quarter earnings call on Friday. “I believe pricing power must be earned—and the method to earn it is by pairing price with a genuinely superior consumer experience.”

In recent years, major consumer packaged goods firms managed to implement price hikes with little pushback. That opportunity is now shrinking. Costs continue to climb due to factors from tariffs to raw materials, yet consumers are less willing to simply accept these increases. This creates a delicate equilibrium: How can companies safeguard profitability without alienating customers?

P&G, ranked No. 51 on the Fortune 500, is prioritizing product innovation over blanket price increases. “Consumers react positively when we provide a genuinely improved offering in our categories because they recognize the added value,” said Schulten, who conducted the earnings call and fielded questions from analysts.

This strategy varies by product. With Tide, P&G recently launched what it calls the most significant formula improvement in 25 years, maintaining the price while boosting effectiveness. Schulten reported this led to mid-teen percentage growth for one of its biggest U.S. businesses. For other brands, the choice for consumers may be: “select the new, improved version with a slight price increase and the pledge of better performance, or continue with the familiar product,” he explained.

P&G’s quarterly performance indicates the tactic is proving effective for now. The company posted net sales of $21.2 billion for the quarter, a 7% rise compared to the year-ago period and significantly surpassing Wall Street’s forecast of approximately $20.5 billion. Organic sales increased over 3%, with advances in all 10 product divisions and every geographic market. Adjusted earnings per share of $1.59 exceeded the analyst consensus estimate of $1.56.

Yet beyond the strong top-line figures, Schulten was frank about the challenges P&G is confronting. Tariffs, elevated commodity expenses, and greater investment are projected to generate a headwind of about $0.25 per share, nudging the full-year EPS toward the bottom of its guidance range of flat to 4% growth. He observed that this cost pressure is impacting the whole consumer goods industry. Schulten also cautioned that rising oil prices related to Middle East tensions are anticipated to reduce after-tax earnings by roughly $150 million in the fiscal fourth quarter and could expand into an annual headwind of about $1 billion by fiscal 2027.

P&G’s overarching conviction is that the core principles remain unchanged: consumer trust, built on product quality, still converts into the ability to command higher prices. However, shoppers now make that judgment with each individual purchase.

Sheryl Estrada
sheryl.estrada@.com