Volume growth drove a strong quarter for Procter & Gamble as the company is relying more on innovation, and less so on price hikes, to boost revenue, as prices were flat from a year ago from the first quarter in six years.
The maker of Bounty, Head & Shoulders, and Gillette saw net sales rise 2% to $21.9 billion, with organic sales up 3% and volume up 1%, in its fiscal Q2 ending December 2024. North American organic sales and volume posted 4% growth in the quarter.
Its beauty segment saw volume decline by 1%, with organic sales up 2%. Hair care sales were up as volume grew (perhaps renewed interest in drugstore shampoo, particularly P&G’s Pantene, thanks to a plug by Alix Earle in December could be helping), as were sales for personal care, which P&G attributed to new innovations. Organic sales for skin care dipped, however, as volumes dropped. When asked about potential M&A targets, CEO Jon Moeller shared P&G would be the most interested in personal healthcare (which currently houses brands like Pepto Bismol) along with skin care and other specialty beauty.
Grooming garnered a 2% volume and organic sales boost. Healthcare volume was flat, with organic sales up 3%. Oral care and personal healthcare both saw organic sales increase in the low single digits. Fabric and home care got a 1% volume boost, while baby, feminine, and family care volume and organic sales surged 4%.
The company has been doubling down on innovation to “create and extend superiority across the business,” Moeller said, pointing to recent launches like Charmin Smooth Tear toilet paper, Tide Oxi Boost Power Pods, and whole body deodorants across Old Spice, Secret, and Native brands.
In the quarter, consumer behavior was “volatile,” as the company saw “phasing of consumption,” with a boost in October due to hurricanes and port strikes, with consumption slowing in November and returning in December, CFO Andre Schulten said. Moeller also noted that it’s seen private label shares stay flat or decline in the US and Europe, which he said is “relatively reassuring” for consumer stability.
Zoom out: P&G, an early earnings reporter among CPGs, could be among many who zero in on innovation over price bumps to drive growth this year, as Deloitte recently reported that many CPG execs are eyeing a change in strategy in 2025.
Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.