Procter & Gamble, in a Strategy Shift, Moves to Raise Prices

Company would seek to push through large price increases on Pampers diapers and Bounty paper towels

By Sharon Terlep

https://twitter.com/sharonterlep

Updated July 31, 2018 5:25 p.m. ET

Procter & Gamble Co. PG -0.38% said it was raising prices on some of its biggest brands, a strategy shift after the consumer-products giant reported another quarter of lackluster revenue growth.

After more than a year of trying to combat weak demand with lower prices on staples like Tide detergent and Gillette razors, executives said Tuesday the company was changing course. P&G said it would increase prices on its Pampers brand in North America by 4% on average and by 5% on its Bounty, Charmin and Puffs brands. ... The increases go into effect later this year or in early 2019. As the biggest player, P&G tends to drive industrywide pricing moves.

P&G is just the latest big U.S. company raising prices amid a strong U.S. economy and healthy consumer spending. But unlike some manufacturers or food brands such as Coca-Cola Co., P&G didn’t highlight tariffs or trade disruptions for its shift. Rather, executives pointed to market dynamics.

Commodity costs have been on the rise since last year, though consumer-products companies continued to discount due to weak demand, increased competition and pressure from retailers to lower prices. That dynamic slowed sales and reduced margins. P&G executives said they were optimistic stronger demand, coupled with improved products and savvier marketing, would result in shoppers willing to pay higher prices. ... The cost will come through a combination of straightforward price increases, a shift toward more premium products, a reduction in coupons and smaller packages.
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