Innovation ‘sits at the heart’ of business growth

Procter & Gamble says its innovation pipeline sits “at the heart of everything [it] does” as a business, and that it will continue to prioritise investment in the area.

Speaking to investors today (22 January), the business’s leadership highlighted the role of innovation in driving growth for its brands, which include Gillette, Pampers and Ariel.

For example, it attributed double-digit sales growth in its personal care segment to “innovation-driven volume growth”, and said mix had improved in the oral care segment due to success in its premium innovation portfolio.

“Our business model is […] heavily innovation based. It’s at the heart of everything we do,” CEO Jon Moeller stated.

The FMCG giant was reporting results for its second quarter of 2025, which ran from October to December 2024. In this three-month period, it generated sales of $21.9bn (£17.8bn), up 2% versus the same period a year prior. Volume sales also increased by 2% year-over-year in the period, with pricing having a neutral contribution to sales.

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That means that, year-over-year, pricing remained broadly flat across the group in the quarter. Speaking about the company’s approach to pricing, Moeller said that there is no “red line” in its pricing strategy, and that the business will “make the choices that maximise value”. He did say, however, that negative pricing (meaning prices going down across the business) was an unlikely scenario and that positive pricing had contributed to the company’s growth in 19 out of the last 20 quarters.

Meaningful innovation is the “primary enabler of modest amounts of pricing” for P&G, Moeller said. Going forward, the business will continue to “combine pricing with innovation wherever that’s possible and reasonable”, said its CFO Andre Schulten.

Committed to reinvestment

Innovation can act to drive increased pricing and positive mix for P&G, as well as volumes, meaning it is a crucial component of its growth plans going forward.

However, the company’s leadership was asked by an investor if it would consider lowering its reinvestment rate in order to meet its bottom-line guidance (largely concerning profit).

Moeller said that even in quarters where P&G has faced extremely significant headwinds, it has increased spending on innovation.

“That’s our mindset,” he said. “And I just described the strong innovation pipeline, we will fully support that pipeline, and frankly, I don’t think it will, but if that means that we come in a little bit lower, then that’s what we need to accept.”

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In the call today, P&G’s leadership was clear it would “support” that innovation with commercialisation, however, on advertising and communication spend specifically it did say it would invest at a “slower” pace versus previous years.

Schulten said that in recent years, P&G had effectively built out its “playbook” and worked out “how far [it] can push frequency and reach”.

“We’re focusing mostly now on optimising within that playbook and improving content quality,” he said.