P&G's Pricing Power Looked Like a Moat. Then It Vanished in Two Years.

In the summer of 2023, P&G told investors something that sounded like the cleanest moat in consumer goods. Organic sales had grown 7% for the fiscal year, and nine of those points — nine — came from raising prices.¹ Tide, Pampers, Gillette, Dawn: the company had pushed list prices up across the shelf and the world kept buying. Analysts called it premiumization. Pricing power. A brand portfolio so strong it could name its number. Two fiscal years later, that same engine contributed exactly one point.⁶ The moat had not been widened. It had drained.

The story everyone told was that P&G's brands are so superior consumers will trade up regardless of price — a structural advantage that compounds. Almost every word of that is doing more work than the record supports. The 9 points of pricing in FY2023 came alongside a 3-point drop in volume: P&G sold fewer units to extract more dollars.¹ That is not a brand pulling demand up the price ladder. That is a company passing through inflation and watching the cart get lighter.

Watch the price contribution melt

The cleanest way to see what really happened is to put the three years side by side and ask one question: where did the growth come from? In FY2023, price did almost all of it and volume went negative. In FY2024, net sales reached $84.0 billion on 4% organic growth — but pricing had already halved to 4 points, with volume and mix flat.² And inside that year, the rotation was even sharper: by the final quarter, volume grew 2 points while pricing added just 1.⁴ The lever had quietly flipped.

By FY2025 the picture was unambiguous. Net sales were $84.3 billion — essentially flat versus the prior year — and the 2% organic growth split evenly: one point of price, one point of volume, mix neutral.⁶ A company that had been growing on price two years earlier was now growing on barely anything at all, and what little it had was no longer coming from the pricing lever. The premium story had become an arithmetic story, and the arithmetic was thin.

The brands consumers were supposedly trading up into

Here is the part that breaks the premiumization thesis at its core. If P&G's brands were so superior that buyers would climb the price ladder no matter what, you would expect share to hold or rise as prices went up. Instead, P&G's own Q1 FY2025 slides show the opposite in three of its anchor categories: global value share fell 0.2 points in Fabric Care, 0.3 points in Baby Care, and 0.5 points in Feminine Care year-over-year.⁵ These are not fringe lines. Tide and Pampers and Always are the brands the premiumization story is built on — and they were leaking share precisely while the company leaned on price.

The mechanism underneath is simple and it is cyclical, not structural. Input costs spiked, P&G raised prices, revenue rose because people still needed detergent and diapers — but the demand was inelastic, not loyal. There is a difference. Inelastic demand pays the higher price grudgingly and starts hunting for a cheaper shelf the moment it can. That hunt shows up as a volume decline first, then as a share decline, then as a pricing lever that stops moving because the room to raise has run out. P&G ran exactly that arc in three years.

P&G itself never claimed the premium story

The most underrated rebuttal to the premiumization narrative comes from P&G's own playbook. The official doctrine is 'superiority,' and the company has been explicit that superiority is not a synonym for charging more.

Value at every price point — including the cheap ones. That is a posture designed to defend volume across the ladder, not to march everyone up to the top rung. The market took the inflation-era pricing surge and read into it a strategy P&G never actually professed. The company was passing through costs while protecting its tiers; the narrative crowned it a premiumization machine. Those are not the same thing, and the gap is where the misread lives.

And then there is the quiet line nobody quotes. In the October–December 2023 quarter, P&G wrote down the Gillette trade name by $1.3 billion pre-tax — a $1.0 billion after-tax non-cash impairment on one of the very crown-jewel premium brands the story is built around.⁸ You do not impair an intangible because the brand is getting stronger. The impairment is the auditor's version of the volume decline: the future cash the brand was expected to generate got marked down. The premiumization narrative never mentions it, because it doesn't fit.

But nine straight years of growth has to mean something

The fair objection is that this is too harsh. FY2025 was P&G's ninth consecutive year of organic sales growth — a streak almost no consumer-goods company can match — and the business throws off enormous cash; FY2024 alone produced $19.8 billion in operating cash flow.⁶³ That is real, and it is not nothing. A portfolio that can grow every year through inflation, recession, and a pricing reset is a genuinely good business. The honest version of the critique is not that P&G is weak. It is that the specific claim — durable, structural pricing power that lets it premiumize against the will of the market — is the wrong reason it's a good business. The strength is breadth, distribution, and value-at-tier discipline. Calling it pricing power flatters the wrong muscle, and it sets investors up to be surprised when the price lever stalls, which it did, right on schedule.

P&G spent two years looking like the purest pricing-power machine in the consumer aisle, and then proved it wasn't — not with a crisis, but with a fade. Nine points of price became four, then one. Volume came back as price went away, share slipped in the categories that were supposed to be untouchable, and a flagship brand got marked down on its own balance sheet. The lesson isn't that P&G failed. It's that the market mistook a cost pass-through for a moat — and the difference only shows up when the costs stop rising and the customers start counting.