The Last Brands Standing: How Costco, Coca-Cola, Starbucks, On Holding, and Procter & Gamble Are Defying the Trade-Down Economy
The American consumer, battered by years of cumulative inflation, is doing something brands spent decades hoping would never happen at scale: walking away. Not just from luxury goods or impulse buys, but from household names that once seemed as permanent as wallpaper. Generic laundry detergent, store-brand soda, off-label running shoes — the trade-down is happening at every income level, in every aisle, in every demographic. And yet, against that brutal backdrop, a handful of companies are not only holding the line on price — they're actually raising it.
According to a McKinsey report, 79% of consumers are trading down. That number is not a rounding error or a statistical blip — it is a near-total reordering of how American households allocate spending. A March 2026 McKinsey survey of nearly 5,000 grocery consumers found that 60% said getting good value for money had become more important, more than half said they were buying less on impulse, 47% were buying more private-label products, and 43% were more carefully comparing prices. The walls of brand loyalty, built over generations through advertising dollars, emotional storytelling, and habitual purchasing, are crumbling in real time.
But five companies — Costco Wholesale, Coca-Cola, On Holding, Starbucks, and Procter & Gamble — have managed something rare and, for investors and brand strategists alike, deeply instructive: they are keeping their pricing power intact even as the market convulses around them. Their strategies differ sharply, but each reveals something important about what it actually takes to command a premium when consumers are counting every dollar.
The Structural Shift Nobody Can Ignore
To understand why these five brands matter, you have to first appreciate the depth of the shift underway. According to Deloitte's 2026 retail forecast, four in ten Americans now shop on a budget — and higher-income families are following suit. Nearly 70% of Deloitte-surveyed retail executives said trading down and seeking out value channels are structural changes, not just inflation-related phenomena. That last part is crucial. Inflation may have lit the fuse, but the explosion has changed the terrain permanently.
In 2025, consumer decision trees were being "flipped," with shoppers starting from a fixed budget and then trading off between categories based on perceived value and price. The result has been decreased traditional brand loyalty, increased focus on consumer value, and a prevalence of "promo seekers." Brands that once coasted on decades of brand equity are now being forced to justify themselves on fundamentally new terms.
A global EY Future Consumer Index survey of over 20,000 people found that 80% say price is now the top factor when choosing brands, and 77% have changed how they shop due to rising prices. Price sensitivity and high prices are clouding consumers' views as food costs peak, brands resort to uncharacteristic discounts, and retailers demonstrate the power of undercutting competitors — breeding brand-switching behaviors at scale.
Against that environment, the companies that hold pricing power are not doing so by accident. They have built moats — some through membership psychology, some through emotional brand equity, some through premium positioning — that keep customers tethered even when the rational financial calculus says to walk.
Costco: The Discount King That Charges You to Shop
Why the Membership Model Is Inflation-Proof
Costco is a discount king, but what makes it stand out in terms of pricing power is its membership fee. It raised the fee in 2025 from $60 to $65 — or from $110 to $120 for an executive membership — but renewal rates and new signups have remained strong. That is not the behavior of a price-sensitive consumer base. That is loyalty encoded into a financial commitment.
The brilliance of Costco's model is that it inverts the typical retail relationship. The customer pays upfront for access, creating a sunk-cost dynamic that makes them more motivated to shop there, not less, when money gets tight. Shoppers tend to shop at Costco even more when times are tough, because every penny counts and they want to maximize the return on their membership and get the best prices available.
Costco promotes its business concept as delivering brand-name products at rates "substantially lower" than those available from traditional wholesale or retail suppliers. It also distributes private-label Kirkland Signature items across categories ranging from groceries and coffee to clothes and detergent. The Kirkland line is itself a master class in value positioning — it converts trade-down behavior into a brand loyalty play, because shoppers who reach for Kirkland instead of a national brand are still reaching for a Costco-branded product.
The Numbers Back It Up
In Costco's 2026 fiscal fourth quarter, ended August 30, total sales increased 11.2% year over year to $93.9 billion, driven by a 9.4% increase in comparable sales. Average ticket was up 5.9%, though management noted it is keeping prices down — implying those increases reflect consumers buying more, not paying more per item. The distinction is critical: Costco's revenue growth is volume-driven, a sign of genuine consumer preference rather than inflationary price extraction.
Costco reported September 2026 net sales of $30.02 billion for the five weeks ended October 4, up 13.0% from $26.58 billion a year earlier. For a company already operating at the scale of a small national economy, that kind of growth in a trade-down environment is extraordinary — and it speaks directly to the fact that Costco has positioned itself as a destination for value-conscious shoppers rather than a casualty of their behavior.
Coca-Cola: The Original Pricing Power Story
Warren Buffett Wasn't Wrong
Coca-Cola is the classic example of a company with great pricing power, and that's one of the reasons Warren Buffett loves its business. People need to have something to drink, and they love Coca-Cola. That sentence sounds simple, almost dismissive in its brevity. But unpacked, it describes something profound about how a consumer brand achieves genuine durability: the product addresses a basic need, and the emotional attachment is so deeply ingrained that switching feels like a small personal loss.
The company has taken multiple actions to keep consumers buying despite inflation, including new marketing campaigns, smaller and lower-cost packages, and active collaboration with retailers to maintain its products' visibility and shelf presence. This is not passive brand coasting — it is active management of consumer relationships across multiple price points and purchase occasions.
The Financial Machine Keeps Running
Sales increased 6% year over year in the second quarter, though unit case volume was up only 1%. Higher pricing is offsetting rising costs, and earnings per share rose 30% to $0.86. That gap between volume growth and revenue growth tells the whole story: Coke is getting paid more per unit, and consumers are largely going along with it.
This model has led to extraordinary success over time, and Coca-Cola pays shareholders back through its excellent dividend, which it has raised for 64 consecutive years — earning it the designation of Dividend King. That streak spans recessions, world crises, shifting consumer tastes, and multiple cycles of inflation. It is perhaps the single most compelling data point in the case for Coca-Cola's pricing durability.
Institutional investors have taken notice. In the ClearBridge Large Cap Value Strategy Q3 2026 fund letter, Coca-Cola was noted as a new position, reflecting the fund's strategic pivot toward higher-quality consumer staples. Portfolio managers Dmitry Khaykin and Deepon Nag highlighted Coca-Cola's strong brand equity and pricing power as critical in navigating the current inflationary environment. In the fund's own words: "We bought the higher-quality Coca-Cola, a global beverage leader with strong brands, a global footprint and robust pricing power."
On Holding: The Upstart That Charges Like a Legacy Brand
Premium Athleisure in a Penny-Pinching Market
Among the five brands on this list, On Holding is the most surprising entry. The Swiss athletic footwear and apparel company doesn't have a century of American brand history behind it. It doesn't have a Kirkland-tier hedge built into its model or a sugary, addictive product that people reach for without thinking. What it does have is a sharply defined premium identity and a customer base affluent enough that trading down isn't a pressing concern.
On Holding is a player in athleisure and athletic footwear that is positioning itself as the leader in premium products. It has cultivated a major following and targets affluent consumers, which has helped it withstand the need to mark down its products. In a market where Nike is running sales and legacy brands are chasing discount-hungry shoppers, On has done the opposite — it has leaned into exclusivity as a feature, not a liability.
Margin as Brand Statement
On Holding has maintained its pricing and brand image, and gross margin improved from 61.5% to 65.4%. The company has signed important celebrity ambassador deals with names like actress Zendaya and soccer star Kylian Mbappé to secure its positioning as a power player in the industry. Those ambassador choices are calculated moves in the luxury adjacency game — associating the brand with cultural figures who themselves represent premium aspiration rather than mass appeal.
The margin improvement deserves particular attention. In a period when most consumer brands are watching gross margins compress under the weight of rising input costs, On Holding's expansion from 61.5% to 65.4% suggests pricing power that goes far beyond holding the line — it is actively expanding it. That kind of margin trajectory signals a brand gaining perceived value in consumers' minds, not losing it.
Starbucks: Redemption Through Premium Discipline
The Cost of Over-Promotion
No company on this list has had a rockier recent journey than Starbucks. Starbucks has had a rough time over the past few years, but under the new leadership of CEO Brian Niccol, things are starting to turn around. The pricing power is actually working in its favor; previous management had run too many specials, diluting the brand. Niccol has taken the opposite approach, cutting the specials and leaning into the company's premium image.
This reversal is worth examining carefully, because it runs counter to the instinct most companies have during a consumer spending crunch. When people are pinching pennies, the reflexive corporate response is to flood the market with promotions, limited-time offers, and loyalty app discounts. Starbucks experienced a decline in loyalty in 2024 as rising prices and concerns about value drove consumers elsewhere. The company lost 1.5 million active loyalty members in the U.S., and foot traffic dropped by 7%. More customers turned to smaller chains or at-home coffee alternatives in response to perceived price hikes. That pain was real — but Niccol's diagnosis was counterintuitive. The problem wasn't the price; it was the inconsistency that made paying the price feel irrational.
The Niccol Turnaround
By pulling back on specials and recommitting to what made Starbucks worth $7 for a drink in the first place — the experience, the craft, the ritual — Niccol has reestablished the brand's premium credentials. The early results validate the strategy. In the 2026 fiscal third quarter ended June 28, global comparable store sales increased 7.9% year over year, driven by a 4.2% increase in transactions — a sign that customers are coming back not just for discounts, but because the brand has re-earned their trust.
The Starbucks story is perhaps the most nuanced on this list because it illustrates a trap that premium brands fall into: trading short-term traffic for long-term identity erosion. Every coupon and BOGO special trained customers to wait for the deal rather than see the standard price as fair value. Niccol's approach — fewer promotions, sharper experience, recommitment to premium — is a high-wire act in this environment, but the early data suggests it's working.
Procter & Gamble: The Everyday Luxury Play
Small Pleasures, Big Brand Equity
Procter & Gamble makes many of the premium beauty and hygiene brands that consumers know and love — and are willing to pay a little bit more for. That's what it counts on, and sales typically increase by low single digits even in rough times. While some customers switch down to generic brands, many pay up for the small luxuries of brands they see as a value because they're better — names like Pampers diapers, Tide laundry detergent, and Puffs facial tissues.
This is the "affordable luxury" thesis applied to the bathroom cabinet and the laundry room. A consumer might switch from brand-name cereal to store-brand without blinking. But switching from Tide to the generic detergent, or from Pampers to the no-name diaper, feels different — more personal, more risky. Parents in particular are reluctant to test performance thresholds on products that touch their kids. That emotional premium is P&G's core asset.
Earning Pricing Power Rather Than Assuming It
The Procter & Gamble Company is leveraging strategic pricing and mix actions to defend margins amid elevated costs from tariffs, commodity and supply-chain pressures. Over the years, P&G has effectively used pricing to offset inflation, underscoring strong brand equity and consumer loyalty. The company drives growth through a blend of premiumization, innovation, and strategic pricing.
What's striking about P&G's current posture is the intellectual honesty of its leadership. P&G CFO Andre Schulten said on the company's fiscal third-quarter earnings call: "I don't think we've lost pricing power. I think pricing power has to be earned — and the way to earn it is to combine pricing with a truly delightful experience for the consumer." That framing — pricing power as something that must be continuously earned rather than assumed — represents a significant evolution from the old consumer staples playbook, where brand recognition alone was enough to justify the premium.
P&G's competitive advantage rests on category-leading brands and a disciplined strategy of "superiority" — aiming to offer superior products, packaging, brand communication, retail execution, and value in every category where it competes. Backed by roughly $2 billion in annual R&D and unmatched consumer-insight capabilities, this strategy sustains premium positioning and pricing power.
The financial results reflect that discipline. For one recent quarter, the company reported net sales of $21.2 billion, a 7% increase versus the prior year and well above Wall Street's estimate of roughly $20.5 billion. Organic sales grew more than 3%, with gains across all 10 product categories and in every global region. Adjusted EPS of $1.59 topped the analyst consensus of $1.56.
Gross margins sit at 49–51%, operating margins stay above 20%, free cash flow exceeds $13 billion per year, and the company has grown its dividend for 68 straight years, making it one of the most financially reliable businesses in the world. For context, the Household Majors sub-industry average gross margin typically runs 45–48%, so P&G at 49–51% is above the benchmark by roughly 200–600 basis points — reflecting genuine pricing power in brands like Tide, Pampers, Gillette, and Oral-B.
What These Five Have in Common — And What They Don't
The Anatomy of Durable Pricing Power
Look across these five companies and a few common threads emerge, though the expression of those threads varies dramatically. Each has built a relationship with its consumer that transcends the transactional. Costco members feel they belong to something. Coke drinkers have an almost irrational loyalty to the taste and the identity it carries. On customers buy into a performance ethos and a social signal. Starbucks regulars are paying for ritual as much as caffeine. P&G buyers trust that Tide cleans better, full stop.
What they do not have in common is a single formula. Costco is a value brand with pricing power derived from membership lock-in. Coca-Cola is an emotional legacy brand with pricing power derived from habit and cultural ubiquity. On Holding is a premium upstart with pricing power derived from aspirational positioning. Starbucks is a premium experience brand rebuilding its pricing power through identity recommitment. P&G is a portfolio of everyday essentials with pricing power derived from performance trust and product innovation.
Premium companies that can maintain or raise prices are performing well despite inflation — but the path to that premium varies. The unifying characteristic is not price point but consumer conviction: in each case, enough buyers believe that the product or experience is genuinely worth more than the alternative to make the math work for the company.
The Trade-Down That Isn't
Consumers are trading down — 74% of consumers report trading down in at least one product category to save money, according to McKinsey's Consumer Pulse. Value pressure is structural, not temporary. Consumers are trading down, switching brands for discounts, and embracing private label — and loyalty must deliver measurable savings to survive.
But the five brands examined here reveal the other side of that story: even in a period of mass trade-down, consumers are remarkably willing to maintain spending on brands that have made themselves essential — either through genuine value delivery, as Costco has, or through identity construction, as On Holding and Starbucks have. This shift reflects how fragile brand devotion has become in an era of endless choice, rising costs, and viral-driven alternatives — but fragility is not universality. Some brands have insulated themselves, and the study of which ones and why is the most important consumer behavior question of the decade.
What It Means for the Market — And for You
For investors, the lesson is relatively clean: companies with genuine pricing power — not the kind that existed because consumers had few alternatives, but the kind built on emotional resonance, performance trust, or structural lock-in — are among the most durable assets in a volatile environment. Over the years, P&G has effectively used pricing to offset inflation, underscoring strong brand equity and consumer loyalty. Coca-Cola's 64-year dividend growth streak and Costco's accelerating same-store sales tell a similar story in different voices.
For brand strategists and business leaders watching from the outside, these five companies offer a harder lesson: pricing power is not inherited, and it is not permanent. After years of cumulative inflation, consumers are more price-sensitive, more willing to compare, and less reflexively loyal. Against that backdrop, every brand's message must evolve. The brands that survive the trade-down era intact will be the ones that gave consumers a reason — rational or emotional, functional or aspirational — to keep paying. Everyone else is fighting for shelf space in the generic aisle.
