The Portfolio P&G ChoseNarrow moat

Procter & Gamble (PG) — moat facet

P&G made itself stronger by selling what it did not lead, and has spent seven years living with the one big purchase that disappointed.

P&G's moat is partly a set of decisions about what not to own. Since 2014 it has cut about 100 brands to leave about 651, sold Duracell to Berkshire Hathaway and 41 beauty brands to Coty for its own shares23, and bought selectively in health: Merck KGaA's over-the-counter health business for $3.7 billion in fiscal 20194 and Thorne for $3.8 billion, agreed in August 20265.

Portfolio moves since 2016 ($bn)11.4Coty sale value, 20169.6Gillette write-downs3.8Thorne, agreed 20263.7Merck KGaA OTC, FY2019P&G Forms 10-K FY2017, FY2019, FY2024-FY2026; write-downs before tax
More sold than bought, and one purchase written down.

The result is a company concentrated in five segments where it leads. Fabric & Home Care was 35% of net sales and 35% of net earnings in fiscal 2026; Baby, Feminine & Family Care 24% and 24%; Beauty 19% and 17%; Health Care 14% and 15%; Grooming 8% and 9%6. Return on invested capital, 7.4% in fiscal 2015, was 19.9% in fiscal 20267.

The exception is Gillette. The 2005 acquisition that built Grooming8, has cost $8.3 billion of impairment in fiscal 20199 and $1.3 billion more in fiscal 202410, and Grooming's share of earnings fell from 15% to 9% in ten years1112. It is still P&G's most profitable segment by margin.

The weights have moved toward the least glamorous businesses. Fabric & Home Care's share of net earnings rose from 27% in fiscal 2016 to 35% in fiscal 20261314, while Beauty's fell from 22% in fiscal 2019 to 17%1516.

The balance sheet records the purchases. Goodwill totalled $41,276 million at 30 June 2026, of which Beauty held $14,073 million, Grooming $12,887 million and Health Care $7,884 million17. Fabric & Home Care, the largest segment, carries only $1,838 million, because P&G built it rather than bought it.

The facet is narrow and stable: the choices were mostly good, and one expensive mistake is being lived with. It would narrow further if the Gillette brand needed a third write-down, or if Thorne became the next one; intangible assets are already a large part of the balance sheet, and the Gillette brand's cushion above its carrying value is only greater than 10%18.

Moat trajectory: Holding steady

Focused on five segments; Gillette written down twice; Thorne pending.

The number that tests this moat
Moat Explorer calc
Fabric & Home Care share of segment net earnings, FY2026
About 34.8%

How much of the profit rests on laundry and cleaning; a rising share means the rest of the portfolio is weakening.

How it's calculated: Fabric & Home Care net earnings ($5,632M) divided by the five segments' net earnings ($16,167M), FY2026 10-K segment note.
Source: Moat Explorer calculation from P&G filings ↗
Aspects of the moat
DIG DEEPER 01
From About One Hundred Brands to About Sixty-Five
P&G cut its portfolio from about 100 brands to about 65 after 2014, and its return on capital more than doubled.
DIG DEEPER 02
Coty and Duracell: Selling Well
P&G sold Duracell and 41 beauty brands for its own shares, shrinking its share count while dropping businesses it did not lead.
DIG DEEPER 03
Gillette: $9.6 Billion of Write-Downs
P&G has written about $9.6 billion off Gillette since 2019, yet Grooming still earns P&G's highest segment margin.
DIG DEEPER 04
Health Care: The Segment P&G Keeps Buying Into
P&G has spent $3.7 billion and agreed to spend $3.8 billion more on health brands, the one area where it is buying rather than selling.
⚠ Threats to the moat
⚠ THREAT 01
Intangibles Are 43% of the Assets
About 43% of P&G's assets are goodwill and the Gillette brand, concentrated in the segments whose earnings fell.
⚠ THREAT 02
Leaving Argentina, Nigeria and Pakistan
P&G has paid about $1.3 billion after tax to leave Argentina, Nigeria and Pakistan, and says it may leave Russia too.
References
  1. ReportedSince 2014 it has cut about 100 brands to leave about 65, sold Duracell to Berkshire Hathaway and 41 beauty brands to Coty for its own shares, and bought selectively in health: Merck KGaA's over-the-counter health business for $3.7 billion in fiscal 2019 and Thorne for $3.8 billion, agreed in August 2026.
    Procter & Gamble Form 10-K for fiscal 2016 - the portfolio reduction to about 65 brands, the Duracell exchange with Berkshire Hathaway, segment shares and blade share. — FY2016 · publ. August 2016 · source ↗
  2. ReportedSince 2014 it has cut about 100 brands to leave about 65, sold Duracell to Berkshire Hathaway and 41 beauty brands to Coty for its own shares, and bought selectively in health: Merck KGaA's over-the-counter health business for $3.7 billion in fiscal 2019 and Thorne for $3.8 billion, agreed in August 2026.
    Procter & Gamble Form 10-K for fiscal 2016 - the portfolio reduction to about 65 brands, the Duracell exchange with Berkshire Hathaway, segment shares and blade share. — FY2016 · publ. August 2016 · source ↗
  3. ReportedSince 2014 it has cut about 100 brands to leave about 65, sold Duracell to Berkshire Hathaway and 41 beauty brands to Coty for its own shares, and bought selectively in health: Merck KGaA's over-the-counter health business for $3.7 billion in fiscal 2019 and Thorne for $3.8 billion, agreed in August 2026.
    Procter & Gamble Form 10-K for fiscal 2017 - completion of the Beauty Brands transaction with Coty ($11.4 billion of value, $5.3 billion after-tax gain). — FY2017 · publ. August 2017 · source ↗
  4. ReportedSince 2014 it has cut about 100 brands to leave about 65, sold Duracell to Berkshire Hathaway and 41 beauty brands to Coty for its own shares, and bought selectively in health: Merck KGaA's over-the-counter health business for $3.7 billion in fiscal 2019 and Thorne for $3.8 billion, agreed in August 2026.
    Procter & Gamble Form 10-K for fiscal 2019 - the $8.3 billion Shave Care impairment, the Merck KGaA over-the-counter acquisition, five-year financial summary, segment shares, Walmart and top-ten customers. — FY2019 · publ. August 2019 · source ↗
  5. ReportedSince 2014 it has cut about 100 brands to leave about 65, sold Duracell to Berkshire Hathaway and 41 beauty brands to Coty for its own shares, and bought selectively in health: Merck KGaA's over-the-counter health business for $3.7 billion in fiscal 2019 and Thorne for $3.8 billion, agreed in August 2026.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - notes: restructuring, goodwill and intangibles, acquisitions and divestitures, subsequent events and commitments. — FY2026 · publ. 4 August 2026 · source ↗
  6. ReportedFabric & Home Care was 35% of net sales and 35% of net earnings in fiscal 2026; Baby, Feminine & Family Care 24% and 24%; Beauty 19% and 17%; Health Care 14% and 15%; Grooming 8% and 9%.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A and segment note: segment contents, operating segments and shares of net sales and net earnings. — FY2026 · publ. 4 August 2026 · source ↗
  7. Moat Explorer calcReturn on invested capital, 7.4% in fiscal 2015, was 19.9% in fiscal 2026.
    Moat Explorer calculation from SEC EDGAR XBRL for CIK 80424: return on invested capital 7.4% (FY2015), 9.6% (FY2016), 10.4% (FY2017), 12.3% (FY2018), 5.1% (FY2019, Gillette impairment), 16.3% (FY2020), 19.3% (FY2021), 19.2% (FY2022), 18.9% (FY2023), 19.0% (FY2024), 20.5% (FY2025), 19.9% (FY2026). — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Operating income x (1 - effective tax rate; 35% default before fiscal 2018 and 21% where pre-tax income is untagged) divided by average (total assets - current liabilities - cash), from SEC EDGAR XBRL using the tools_roic_edgar.py method; after fiscal 2019 the cash tag is CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents. A 7% hurdle is assumed.
  8. ReportedThe 2005 acquisition that built Grooming, has cost $8.3 billion of impairment in fiscal 2019 and $1.3 billion more in fiscal 2024, and Grooming's share of earnings fell from 15% to 9% in ten years.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 1A risk factors, Item 5 market information and performance graph, and critical accounting estimates (Gillette brand). — FY2026 · publ. 4 August 2026 · source ↗
  9. ReportedThe 2005 acquisition that built Grooming, has cost $8.3 billion of impairment in fiscal 2019 and $1.3 billion more in fiscal 2024, and Grooming's share of earnings fell from 15% to 9% in ten years.
    Procter & Gamble Form 10-K for fiscal 2019 - the $8.3 billion Shave Care impairment, the Merck KGaA over-the-counter acquisition, five-year financial summary, segment shares, Walmart and top-ten customers. — FY2019 · publ. August 2019 · source ↗
  10. ReportedThe 2005 acquisition that built Grooming, has cost $8.3 billion of impairment in fiscal 2019 and $1.3 billion more in fiscal 2024, and Grooming's share of earnings fell from 15% to 9% in ten years.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - notes: restructuring, goodwill and intangibles, acquisitions and divestitures, subsequent events and commitments. — FY2026 · publ. 4 August 2026 · source ↗
  11. ReportedThe 2005 acquisition that built Grooming, has cost $8.3 billion of impairment in fiscal 2019 and $1.3 billion more in fiscal 2024, and Grooming's share of earnings fell from 15% to 9% in ten years.
    Procter & Gamble Form 10-K for fiscal 2016 - the portfolio reduction to about 65 brands, the Duracell exchange with Berkshire Hathaway, segment shares and blade share. — FY2016 · publ. August 2016 · source ↗
  12. ReportedThe 2005 acquisition that built Grooming, has cost $8.3 billion of impairment in fiscal 2019 and $1.3 billion more in fiscal 2024, and Grooming's share of earnings fell from 15% to 9% in ten years.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Note 2 segment information: net sales, earnings before tax, net earnings, margins, capital spending and depreciation by segment. — FY2026 · publ. 4 August 2026 · source ↗
  13. ReportedFabric & Home Care's share of net earnings rose from 27% in fiscal 2016 to 35% in fiscal 2026, while Beauty's fell from 22% in fiscal 2019 to 17%.
    Procter & Gamble Form 10-K for fiscal 2016 - the portfolio reduction to about 65 brands, the Duracell exchange with Berkshire Hathaway, segment shares and blade share. — FY2016 · publ. August 2016 · source ↗
  14. ReportedFabric & Home Care's share of net earnings rose from 27% in fiscal 2016 to 35% in fiscal 2026, while Beauty's fell from 22% in fiscal 2019 to 17%.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Note 2 segment information: net sales, earnings before tax, net earnings, margins, capital spending and depreciation by segment. — FY2026 · publ. 4 August 2026 · source ↗
  15. ReportedFabric & Home Care's share of net earnings rose from 27% in fiscal 2016 to 35% in fiscal 2026, while Beauty's fell from 22% in fiscal 2019 to 17%.
    Procter & Gamble Form 10-K for fiscal 2019 - the $8.3 billion Shave Care impairment, the Merck KGaA over-the-counter acquisition, five-year financial summary, segment shares, Walmart and top-ten customers. — FY2019 · publ. August 2019 · source ↗
  16. ReportedFabric & Home Care's share of net earnings rose from 27% in fiscal 2016 to 35% in fiscal 2026, while Beauty's fell from 22% in fiscal 2019 to 17%.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Note 2 segment information: net sales, earnings before tax, net earnings, margins, capital spending and depreciation by segment. — FY2026 · publ. 4 August 2026 · source ↗
  17. ReportedGoodwill totalled $41,276 million at 30 June 2026, of which Beauty held $14,073 million, Grooming $12,887 million and Health Care $7,884 million.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - notes: restructuring, goodwill and intangibles, acquisitions and divestitures, subsequent events and commitments. — FY2026 · publ. 4 August 2026 · source ↗
  18. ReportedIt would narrow further if the Gillette brand needed a third write-down, or if Thorne became the next one; intangible assets are already a large part of the balance sheet, and the Gillette brand's cushion above its carrying value is only greater than 10%.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 1A risk factors, Item 5 market information and performance graph, and critical accounting estimates (Gillette brand). — FY2026 · publ. 4 August 2026 · source ↗
Sources
Generated September 26, 2026