Procter & Gamble Hit By Price Conscious Consumers

Kroger makes it clear they are going to mercilessly drive name brand product prices down with a surge in their private label business.

I have heard quite a few remarks of shock regarding P&G's weak results. Consumers are trading down. Over the last few years we have highlighted numerous times that the aspirational consumer market is going to be a very difficult one. More recently eight months ago we posted the remark above in a post where we anticipated a brand name price squeeze by private label brands and aggressive retailers.

This isn't rocket science. When people are either unemployed, underemployed or concerned about their future, they are a lot less likely to pay a 50-100% premium for branded goods and services. Private label brands and retailers see price gouging by branded products as an opportunity to take market share. And often there is a marginal or nonexistent delta in product quality.

P&G's Lafley may just be the best CEO in the S&P 500 but I don't think he can master alchemy. I doubt this is a one time event. More likely it is a new reality for years to come.