Additional Coverage:
Tariff Troubles Hit Household Brands
The ongoing tariff disputes initiated by the Trump administration are impacting some of the biggest names in consumer goods, including PepsiCo and Procter & Gamble.
Procter & Gamble (P&G), the manufacturer of household staples like Tide, Gillette, and Charmin, has lowered its sales and profit projections for the year, citing tariffs and fluctuating consumer demand as key factors. P&G CEO Jon Moeller stated that tariffs contribute to inflation and warned of potential price increases across many P&G products. The company has revised its organic sales growth forecast from 3-5% down to 2% for the fiscal year ending in June.
Similarly, PepsiCo has withdrawn its previous earnings per share growth forecast, now anticipating no growth for the year. The company attributes this to rising costs stemming from tariffs and growing consumer unease. CEO Ramon Laguarta anticipates further instability and uncertainty, particularly regarding global trade, which he expects will inflate supply chain costs.
These concerns have significantly impacted the companies’ stock prices, with PepsiCo down 3% and P&G down 4% in morning trading, contrasting with the Dow Jones Industrial Average’s slight gains. Both companies are actively working to mitigate the impact of tariffs, a challenge compounded by the administration’s frequent tariff adjustments.
P&G’s Chief Financial Officer, Andre Schulten, indicated the company would explore alternative sourcing and product reformulations before resorting to price hikes. Any price increases, he added, would ideally be accompanied by product improvements.
P&G has observed shifts in consumer behavior, such as consumers reducing laundry loads to save on detergent, prompting a cautious approach. CEO Moeller acknowledged that consumers are already facing numerous financial pressures, and tariff-related price hikes would likely exacerbate these concerns.
PepsiCo’s Laguarta emphasized the company’s commitment to minimizing disruptions to its operations, consumer and customer relationships, and the long-term health of its business while navigating the tariff landscape.
Like many CEOs, Moeller refrained from directly criticizing the Trump administration, describing them as “very open to dialogue.” However, he admitted P&G is dedicating significant resources to analyzing the economic climate and consumer spending trends.