Question and Answer Session

Operator

(Operator Instructions) Your first question today comes from the line of Lauren Lieberman with Barclays.

Lauren Rae Lieberman

Andre, I wanted to talk a little bit about market growth versus market share. So first off, if you could just -- I know you said volatile a few times. But just if you could give us a sense for sort of a high-level expectation for global market growth over the next 12 months.
And then digging in a little bit more specifically. You shared -- you offered comments on share performance, particularly in North America and also in Europe Focus. But I was curious if you could talk maybe about market share trends or the degree you can tell in China. And maybe let's talk about it excluding SK-II because I think that's an issue unto itself. but just a sense of P&G's performance versus the China market overall. And since it's been lagging for quite a while, arguably, things that you guys are seeing, addressing, doing differently or considering doing differently to shift that trend.

Andre Schulten

Very good. Lauren, so let me start with overall consumption strength because it really is and continues to be strong. The consumption trends in the markets are stable despite multiple headwinds, and P&G is growing consumer offtake in terms of value share in 29 of our top 50 category country combinations.
Globally, we are growing value share by 10 basis points. And the consumption trends are really strong across markets with few exceptions, which we'll get into. U.S. consumption in quarter 3 was 5%, and P&G value share is up. So our consumption actually grew ahead of that, both in terms of value and in terms of volume, actually with volume share being up 40 basis points on all outlet in the most recent period. So continued strength in consumption trends in North America and continued strength in terms of P&G performance within that consumption.
Europe Focus Markets consumption is in the range of 8% to 9%, also very strong. And we are growing by more than a share point within that market. Both volume growth very strong with 4 points in the quarter and 3 points of price/mix. And Europe Enterprise Markets are growing. And so the business from a consumption standpoint, which really for us is the most important metric, is in a good place.
We continue to deal with very specific headwinds in quarter 3 that we've discussed already in quarter 2, but they continue. There's a soft market consumption in China. We'll get more into that to the second part of your question. SK-II continues to be a headwind in the quarter, and we see some impact from tensions in the Middle East. When you sum it all up, that's about 1.5-point impact on the global top line. And then we have the inventory reduction in North America, which is about 1 point on the global top line as well.
And if you put it together, 2 conclusions. One, the headwinds that we're calling out are temporary in nature. So first of all, the inventory reduction, which is a point on the top line. We expect that to be a single event, not a continued phenomena to observe. It was mainly driven by Personal Health Care because the supply situation is stabilizing after a softer season so retailers don't need to hold safety stock. And the headwinds in China on SK-II and in the Middle East will ease over time and eventually annualize over the coming quarters.
That does not mean that we will ignore any of the headwinds. We are fully focused on accelerating growth in China on SK-II and driving sustainable growth in Asia and Middle East markets, but it explains that we can hold our organic sales growth guidance at 4% to 5%. We're very confident in that. And fiscal year-to-date, as we mentioned in the script, we're right at that level.
Last point on that topic. We remain fully invested, and the gross margin progress the team has made is actually enabling us to continue to double down on investments to drive market growth and drive our own consumption and share within that.
Specifically on China, to the second part of your question, Lauren. I think it's a good way to look at China excluding SK-II, as you suggest. We are making sequential progress. The share in the most recent read is flat. And our shipments or our organic sales in China are improving quarter-over-quarter.
If you look at quarter 2, our organic sales excluding SK-II in China were down 10%. In the most recent quarter, they were down 3%. So we're making progress. The market is not yet recovering, but we see the trajectory going in the right direction.
We have pockets of strength. Baby Care, for example, in China, has grown 11% in the current quarter. Our appliance business growing 14%. We are making strong investments in our Hair Care business with a more streamlined portfolio. And we feel good about our ability to continue to drive market growth, be market-constructive in China, and see the upside as we've articulated before on a longer term participating in the Chinese market.
Will it be a straight line to recovery? No. It probably takes a few more quarters before we turn back to growth. But we see the trend line improving.

Operator

The next question comes from Steve Powers with Deutsche Bank.

Stephen Robert R. Powers

Andre, I think you mentioned that nearly all of the commodity benefits that you expected this year, you've essentially fully benefited from through the third quarter. And we've seen year-to-date in the calendar year, [spot price of oil on investments and production costs]. So I guess just some thoughts on that in terms of how that impacts your early planning for fiscal '25.
And maybe sort of related to that, just your confidence in your view, visibility into the productivity pipeline. And can we expect, and do you have confidence, you can run at an accelerated cadence of productivity over the next 12 to 18 months as well based on that pipeline?

Andre Schulten

Yes. So commodity benefits, as we've mentioned in the script and you correctly state, have been really impacting fiscal year-to-date results. Any remaining change, and we see, obviously, the impact of oil running up a little bit and also other commodities like pulp, for example, where the supply situation is a little bit tighter, are coming up. There will be some impact on the current fiscal year. But given flow-through of contracts and various holding policies, I expect that to be limited. And we've anticipated that within our updated guidance ranges. So no impact to the current fiscal year.
Obviously, if spot prices hold, you correctly state it will have an impact on next year. But I do feel strongly about our ability, and I think we've proven it over the past 2 years, that with a combination of strong innovation, good reasonable pricing, combined with that innovation and strong productivity, whatever comes our way, we'll be able to handle.
On the productivity pipeline, I feel very good about where we are. We have now across all businesses, a 3-year, what I would call a productivity master plan, which is something that we invested a lot of energy and time on in each business to make sure that we generate enough ideas, even those that take longer to implement, specifically as we work with our retail partners and we work with our supply chains to really fundamentally improve the efficiency of some of our combined processes.
We have great visibility over 3 years. The top line is sufficient to what we need it to be. So the part I feel really strong about is productivity. It's fully in our control. And I think the teams are doing a great job creating projects and creating visibility to a very strong pipeline over the coming years.

Operator

The next question is from Andrea Teixeira with JPMorgan.

Andrea Faria Teixeira

Andre, I was hoping if you can elaborate a little bit more on the flat price/mix in the U.S. in fiscal 3Q, if are you seeing any down-trade within your portfolio? Or is that self-inflicted as you offer more IGM on the lower price points? Or anything about packing that we should be aware of?
And also related to that, I saw you mentioned in your release about the pricing-related volume declines in Baby Care. Is that mostly China? Is there anything you can elaborate? Or is that also the U.S.?
And I think to Steve's commentary about commodities and question about commodities, anything you can talk to us regarding the lag that we're going to see that coming through into fiscal '25?

Andre Schulten

Andrea, look, the flat price/mix contribution to organic sales growth in the U.S. is an outcome of simply annualizing the price increases that we had taken in previous periods. That was anticipated. And it's consistent with what we're seeing in terms of the construction of the market growth across the U.S. The volume component is coming up, getting closer to about 2%. And the value component is coming down. Different players have priced at different points. So that's really the differential between market and us.
There is no trade-down of note that I -- that we can observe. Private-label shares -- value shares are actually very stable, 16.4% past 1 month and 16.4% past 12 months. So consumers are not trading down within the U.S. towards private label. And if anything, we continue to see, when consumers trade into P&G, which they continue to do because both volume share up strongly in the U.S., and value share up, once they trade into P&G propositions, they continue to trade up actually within those propositions. Be it from liquid detergent to unit dose to PowerMop. So we continue to observe that. So no worries in terms of trade-down.
On Baby specifically, look, Baby is annualizing a very strong base period and obviously was heavily exposed to the commodity run-up, and therefore took pricing, and in combination with productivity and strong innovation.
The volume decline, I would say, is really differential by region. If you look at China, the business is growing very strongly. It's actually 11% growth in the quarter, share growth of more than 1 point in China, and that's with birth rates contracting. So the portfolio strength in China is remarkable.
When I look at the U.S., the premium tier, so when you look at Swaddlers, you look at Cruisers and Cruisers 360, those -- that -- those tiers we have been innovating in very strongly over the past 12, 15 months, and they are growing. They are growing share and they are growing sales.
Where we have an opportunity in the U.S. is on the mid-tier, on Luvs for example. We have not been able to push the full innovation pipeline out for different reasons. And that's what the team really is focused on, to reestablish superiority on those few businesses where we feel that we let value get a little bit out of sync with what the consumer needs. But the plans are there, so now it's a matter of execution.
So we feel very good overall about the Baby Care business. Strong innovation pipeline, and that I think will address the isolated superiority gaps that we might have.
On commodities, it's very difficult to say when they would actually flow through. I think it's safe to say that there's at least 60 to 90 days of delay. Many of the commodities will take longer to flow through simply because of contracts structures that use certain trigger points or holding periods. So I would say at least 60 to 90 days. For many of them, probably longer. The only one that tends to flow through quickly is fuel, diesel, obviously, because it's captured in transportation.

Operator

The next question is from Dara Mohsenian with Morgan Stanley.

Dara Warren Mohsenian

We just touched on pricing, maybe we can switch to the volume side. Could you just talk about your level of visibility and perhaps a bit of magnitude that you're expecting in Q4 in terms of returning to volume growth going forward? Obviously, a flat result this quarter, but there were some items that depressed volume that get better going forward in terms of U.S. inventory, SK-II weakness, et cetera. So just looking for some perspective going forward, particularly as pricing presumably continues to decelerate a bit.
And also maybe you can just touch on, given the heavy marketing this year, presumably with the SG&A increases, the level of payback and ROI you think you're getting on that higher marketing in terms of volume.

Andre Schulten

On the volume side, look, I think the effects that we described that are holding us back in the current quarter, the inventory effect in the U.S. of 2 points, which is 1 point on a global basis, I don't expect that to hold. So I expect the U.S. to continue to grow in terms of volume beyond the 3% that we're seeing in the current quarter. I expect some of the negative headwinds in China, the Middle East and SK-II hopefully will improve sequentially.
But in aggregate, I fully expect the markets to continue to recover, shift more towards volume growth as we've seen consistently over the recent periods. And since we're growing or holding volume share in most geographies, that will also flow into our results. So sequential progress on volumes. Many open questions still, but I expect the line to point upwards.
On marketing spend, you're right, we continue to invest in reach, frequency with strong quality of communication across the markets. We are very diligent in pre-ROI analysis and very diligent in post-event analysis to ensure that we understand whether the spending is effective. And if you look at the results, I would argue it is.
The strongest combinations of great product innovation with a very sharp consumer insight, translated into a great copy, drives strong results. So if you look for example at our Skin and Personal Care business, Old Spice and Secret Total Body deodorant, great consumer insight, great product, great packaging, strong communication, and the business is growing 11% in North America.
If you look at our Home Care portfolio, those are categories that are expandable. With PowerMop, for example, getting new users to use Febreeze plug-ins, those marketing investments grow the market and they grow our share within the market. So expandable categories is a big investment area for us.
So we continue to drive high levels of discipline. We will not spend if there's no ROI. And you're right, we're watching the same and asking the same question to ensure that we remain on the right side of that line.

Operator

The next question is from Bryan Spillane with Bank of America.

Bryan Douglass Spillane

Maybe, Andre, just to pick up on that last point. I guess if we think about year-to-date and I guess as it translates to the full year and the base, we have some headwinds that shouldn't recur, right. The weakness in corporate, chemicals, the destock that you just mentioned, SK-II I guess being more negative than overall market in China for the reasons we know. So I guess, as we kind of think about next year, right, and confidence in being able to be in line with long-term organic sales targets, is -- does the comps make it easier? Should we be thinking about the macro environment maybe not being supportive? Just try to put some context around the organic sales growth this quarter, right, which decelerated from the last quarter. And just is there anything we should be thinking about as we move -- we start thinking about our models for next year?

Andre Schulten

Bryan, I would point first to the market growth expectation, which we said we expect markets to be in the range of 3% to 4% in terms of value growth. And that will be a combination of 2 points of volume and 1 to 2 points of price/mix. That is still our assumption. Our role per our growth algorithm is to be growing slightly ahead of that by driving market growth, which in turn will drive share and a bigger part of us leading the market. So that would be my answer.
On the current fiscal year, obviously, by reiterating guidance of 4% to 5% and being right in the middle of that range fiscal year-to-date, that means mathematically, we expect quarter 4 to be in the 4% to 5% range. And if you project that out, I think with the market growth dynamic I was describing, I think that will give you a good starting point for next fiscal year.

Operator

The next question is from Bonnie Herzog with Goldman Sachs.

Bonnie Lee Herzog

I just had a clarification on your guidance. You maintain your FY '24 organic sales growth of 4% to 5%, but that implies a step-up of growth in Q4 to get to the high end of your range. So I guess I wanted to clarify if you still expect to be at the high end. Or should we assume coming in at maybe the midpoint of your top line guide for the year is more realistic?
And then maybe just a quick question on your SG&A expense, which did step up quite a bit during the quarter. So just maybe hoping for a little more color on the drivers of this.

Andre Schulten

Bonnie, we did not reiterate the top end of the range, but we reiterated the range. And that means 5% is still possible. Is it probable? I don't know, probably more 50-50 than it was before. So the range is valid. I wouldn't point today at the top end of the range.
On the SG&A line, we continue to invest in marketing, as we discussed in previous question. And we really saw an increase in our marketing spend of about 14% year-over-year. That's the main driver. It's offset by productivity on the SG&A line. But really, I would point to continued investment -- productive investment to drive market growth and push out our innovation, and that's the main driver of the SG&A increase that you've seen.

Operator

The next question comes from Olivia Tong with Raymond James.

Olivia Tong Cheang

My question is about mix, which flattened out this quarter after about 1.5 years of improvement. So clearly, you guys have been adamant that we're not seeing trade-down. But as you look at this, how much of that is trade-up is just harder to do now? You've obviously done -- you've been very successful of late with Powerwash and EZ-Squeeze and PODS, et cetera, et cetera. So is that becoming harder? And could you talk about mix expectations over perhaps the next 12 months?

Andre Schulten

Yes. Thanks, Olivia. I don't think the fundamental dynamic in terms of consumers trading into the P&G portfolio and trading up is changing. We've not observed it over the past 2 years, and we've not seen it in the most recent period.
There are some drivers and headwinds to mix. The biggest headwind I would mention is SK-II being down 30%. It's our highest value per -- or one of the highest value per unit items, and that obviously has a material impact on mix. Outside of that, we really don't see in any of the regions a significant down-trading within our portfolio. And as I mentioned in the U.S., we continue to see trade-up. Actually, the premium tiers on Baby Care doing better. I mentioned that in the context of Luvs.
So we continue to think that the way that we innovate, providing value with innovation and showing the superiority of our premium items in the portfolio is resonating with consumers. And as long as we do that and as long as that value is real and tangible for consumers, I think we can hold on to that mix trend that we've seen consistently.

Operator

The next question comes from Chris Carey with Wells Fargo Securities.

Andre Schulten

Chris, are you still there? We can't hear you.

Christopher Michael Carey

Can you hear me?

Andre Schulten

Now we can.

Christopher Michael Carey

Okay. Just regarding the -- just one quick follow-up on the organic sales range for the full year. The slight change -- and I know the range is still in scope. Can you just frame maybe how much of that was the inventory dynamics in the U.S., maybe a little bit less pricing in Argentina, versus anything that has fundamentally developed through the quarter?
And just connected to that, if you could, you mentioned the elasticity dynamics in Baby and Feminine Care in the press release. Can you just comment on what you're seeing from a broader perspective? Specifically as you may need to contemplate some incremental pricing next year with the moves we're seeing on the cost side.

Andre Schulten

Thanks, Chris. I think you gave the answer on the organic sales line. It's exactly that. I think Argentina, as we said, the peso requires a little less pricing. That's an impact on organic sales. And the business is also smaller and responding maybe more aggressively to the pricing. So that is one building block.
The other building block, I think, is -- the biggest one is really the U.S. inventory reduction. So as I think about the step-up that we need to see in order to be within that 4% to 5% range, we assume that, that inventory reduction is a onetimer, and that's what we expect in the guidance range.
The elasticity in general is not changing. I think we've done -- and you see it in the results. I think the teams have done a very good job of making sure that we maintain a healthy value equation for our retail partners and our consumers with strong innovation, with pricing, only pricing where necessary, balancing pricing with strong productivity. So I do feel overall the business is responding very favorably even after we had to take the pricing that we took.
The volume is coming up as we would have expected both in the market and for P&G, and our biggest geographies were growing volume share consistently. So I do feel overall the elasticity is doing well.
Baby is a very elastic category. And especially, as I mentioned, if -- we've not been able to consistently innovate across all tiers. And that actually is a confirmation of the model. So where we've not been able to push the innovation out and hold the full level of superiority as we took pricing, the consumer is responding. And we know the answer to that, which is push the innovation that we know how to do and communicate the superiority. And I'm confident that we'll recover the elasticity here. I don't see a broader issue. Actually, I see a lot of upside with the strength of the innovation pipeline going into next year.

Operator

The next question comes from Callum Elliott with Bernstein.

Callum Elliott

I wanted to come back, please, to Andrea's question on trade-down. I think, Andre, you had pointed to the stable private-label market share as a sign that there is no trade-down. And I want to push back on that a bit. I think we all know that the consumers under the most pressure at the moment are the low-income consumers, many of whom were probably already using private-label products in the first place.
And so my question is, is it not possible that volume reductions and cutbacks amongst the low-income cohorts, sort of who were already using private label a year ago, are offsetting the trade-down impacts and sort of masking that trade-down in that flat market share number that you're talking about? And that could also explain why category growth has weakened so much.
And I guess, just to add to the question. I'm surprised that the private-label market share is the metric that you're pointing to, to justify lack of trade-down. And just wondering, do you not track consumers longitudinally over time to measure trade-down and what consumers are doing? And is private-label market share really the best metric that we have to track this?

Andre Schulten

Fair questions, Callum. On the -- look, I'd be worried that the phenomena you're describing would be a driver if, a, the volume in the market wasn't growing, which it is, and if we weren't able to grow volume share but only grow value share. So I don't think that's the case. We're growing volume share. The market is growing in terms of volume. And one of the hypothesis I would have for you is that a lot of our consumers are actually not switching with private label heavily at this point in time.
On the metrics that we use, look, private-label share is the most visible metric that we can point to, and it's also visible to you. So it's one that is convenient to use and objectively verifiable. So that's why we're using it. Internally, obviously, we use a lot more detail. We track exact consumption by tier, by product form, by retail channel. We check our share versus competitor share at that level of detail. So there's a lot more internal discussion on do we see trade-down within our portfolio, do we see trade-down across our portfolio with competitors to lower tiers? But private label is just the most visible and robust measure that we can point to that is visible to you guys.

Operator

The next question comes from Filippo Falorni with Citi.

Filippo Falorni

I wanted to go back to the U.S. market. The 5% consumption level was pretty strong and we see it in tracked channel data. Are you expecting from a reported standpoint to get closer to that level in Q4 as you don't have the negative impacts from the inventory? Or what are the puts and takes in Q4?
And then just specifically on laundry in the U.S., your largest category. There was some recalls in Tide PODS recently. So maybe you could talk about any potential impact from that in Q4. And then longer term, you announced the innovation on Tide evo. So maybe some color on the rollout of that brand and the product and your expectations.

Andre Schulten

Yes. Filippo, you're right. We hope U.S. market growth continues in the high 4s, low 5s. And I think the trend line is pointing in that direction. And unless we see any major inventory reduction, I would expect us to continue to trend in that same direction. We are driving market growth in most of our categories in the U.S., and that should mathematically then result in stable to increasing shares both on the volume and value side. And that's certainly the objective the team has on all the U.S. businesses.
The laundry recall, it was a very limited recall on a packaging defect on one SKU on Tide PODS. Out of an abundance of caution, the team decided to recall the product. It's no impact or very limited impact actually on the quarter or the fiscal year. And again, that product itself is safe, so no issue with the product. It was a small packaging defect, but in any case, the team decided to go ahead and recall.
We're very excited about the evo innovation. The fiber-spinning innovation has been one of our core developments, so seeing it in market is exciting. But it's very early. So we run these test markets to validate product-market fit, validate the commercial execution, validate everything from packaging color to packaging sizes. And it will take us a few months before we have anything of substance. But yes, the innovation is very exciting, but it will take time before it has an impact on overall laundry growth in the U.S.

Operator

The next question comes from Robert Ottenstein with Evercore ISI.

Robert Edward Ottenstein

Two follow-ups. First, can you talk a little bit more about Europe? Very strong market and your results have been extremely strong. So perhaps what's driving the strength of the market, your market share gains? And is this something that you think can flow through into 2025?
And then second, kind of coming back on China. There's been significant channel shifts that we're noticing, certainly in the beauty area. It's 50% to 60% online with TikTok being half of that. So kind of, number one, wondering to what extent you're adapting to that and are prepared to adapt to that shift? And then second, for the non-Beauty business, do you also see the online business moving to TikTok as well? And maybe talk about your share online and off-line in those categories, the main categories in China.

Andre Schulten

Thanks, Robert. Indeed, Europe results have been outstanding. Aggregate Europe, between Europe Focus Markets and Europe Enterprise Markets, we now have, I think, 12 consecutive quarters of 5% or higher growth, which is outstanding.
I think the strength of the business, maybe let me focus on the Focus Markets here for a minute. The strength of the business has been consistent because of the execution of the team. Strong innovation pushed out over an extended period of time as we were taking pricing. Very strong productivity work in the region across every part of the P&L to limit the amount of pricing we needed to take. But brilliant execution of the pricing that was taken, respecting key price points, respecting retailers' and consumer constraints. And I think that's playing out.
We've also invested very strongly, probably more than ever, in terms of marketing support of those innovations in the Focus Markets. And we are building the same digital capability in terms of consumer targeting to become more effective and efficient with our spend in Europe that we've used in the U.S. for an extended period of time. So all of those would be contributors to growth.
On the Enterprise Markets side, I would caution it's not without headwinds. Russia continues to be a headwind that we called out with a reduced portfolio and very little support of the business. We have work to do in Turkey as Turkey recovers from the heavy inflation-based pricing and some of the Middle East outflow of tensions. So it's not without headwinds, but I think the underlying performance of the European business continues to be strong and it's built the right way.
You're correct on the channel shifting in China. Obviously, Douyin is a significant driver, most heavily probably in Beauty. We've been talking about this before. What we want to make sure is we keep a healthy balance between building brand equity versus simply low-funnel transactional execution via KOLs that only make sales via deep discounting but don't do anything for the brand equity or for our superiority messaging. That's what we're doing.
We're building brand houses on Douyin. We're making sure that we have a good balance between transactional communication and equity communication. We have innovation that is launching on Douyin first. Head & Shoulders Premium would be a good example of most recent innovations. So we're playing in the channel, but we're playing with a sense of value creation and balance between top line growth and profitability.
The channel is relevant for other parts of the business as well, and the same principles apply. We are careful to ensure that we are balanced across top line and bottom line, and we protect and grow underlying brand equity.

Operator

The next question comes from Peter Grom with UBS.

Peter K. Grom

Maybe one quick housekeeping. Can you maybe just help us understand how much of the stronger earnings guidance was related to the improvement in FX? Andre, I know the FX guidance became more favorable. But I think you also mentioned you're reducing your exposure due to the divestiture in Argentina. So I just want to make sure I understand the moving pieces as it relates to the FX impact on the earnings range.
And then just a quick follow-up on SK-II in China. I think month-to-month improvement was mentioned. So just any color you can provide on the exit rate relative to the 30% decline in the quarter, I think, would be pretty helpful.

Andre Schulten

Okay. Peter, yes, the foreign exchange help is an interesting one because the $400 million reduction, as we said, was all related to Argentina. And we had assumed in the previous guidance that whatever exposure is generated in Argentina will have to be offset with pricing within the fiscal year in Argentina. So as the assumption changes and the business size reduces, the net outcome to the P&L is very limited.
So yes, we saw a technical reduction because of the improving peso and the lower size of -- smaller size of the business. The net effect to the P&L will be very limited because of the underlying assumption we made from the very beginning, that we would offset that impact of FX via pricing in the market.
SK-II in China is, I think, bottoming out in terms of the shipment pattern. As we said, we are about 30% down in the quarter. It's very encouraging to see some positive signs in terms of consumer sentiment as the team continues to innovate, the team drives very strong communication on the core benefit base of the SK-II proposition, focusing on PITERA as a core ingredient and reason to believe. We are leveraging -- continue to leveraging the core consumer in China, very loyal to the brand, to amplify that messaging, and it's starting to resonate. So we see positive signs.
It will take time until that translates into shipments though. I think retailers are sitting on a little bit of stock. And I think they will be hesitant to order until they see good signs of consumption increases. So I would caution, I don't expect this to be a fast recovery. This will take some time.
Maybe last point on SK-II. Outside of China, the business is doing very well. We're growing double digits in Japan. So I think the fundamental proposition is healthy, we just have to sort through this period in China. And again worth pointing, I think in the right direction, but it will take time.

Operator

The next question comes from Nick Modi with RBC Capital Markets.

Sunil Harshad Modi

Just a few kind of housekeeping items. Andre, I just wanted to confirm that the destocking in the U.S. was isolated to the Consumer Health business.
And then the other 2 questions I had, the Tide evo, the technology that you've developed, would that be applicable to other brands and other cleaning solutions within the P&G portfolio?
And then just the final thing is, I think there's a lot of -- the theme I'm hearing just broadly from speaking to investors around this call is the delta between obviously how P&G is performing and how everyone else is performing. And I think the competition that you're dealing with, I think, generally are struggling for volume growth.
So as you think about guidance, how much have you contemplated a step-up in competitive spend, right? I understand the fact that you guys have the momentum and you're gaining share and the innovation is working. But I just wanted to get an understanding of kind of how measured your guidance is in relation to potential competitive response.

Andre Schulten

All right. Thanks for the question, Nick. Destocking in the U.S. was broadly Personal Health Care-related. That was the biggest effect. Again, an okay season, but significantly weaker than last year and generally an industry-wide recovery of the supply chain. So if you're a retailer, you no longer see the need to hold safety stock. You're convinced that when the season restarts and you need product, you can order and you get it.
There was some of that also in the Tampax business, in the tampon business, as we have stabilized the supply chain there, similar dynamic. And there was a little bit of destocking in Hair Care because we had upstocking in the base. But the majority of it, to keep it simple, is Health Care.
Indeed, the evo technology, so the fiber-spinning technology, is a technology that can be applied in broader context. We've applied it to facial cleaning in Beauty, and there are many other applications. This is one of our platform technologies. If you think about it, the ability to spin chemistry into a fiber and avoid water as a carrying agent has so many efficiencies and advantages in the chemistry that we can put together and obviously in the logistics and cost side that, yes, we would want to apply it, but step by step. We got to make sure the evo's proposition works well, and that's why we're in test market, and we talked about this earlier.
Competitive spending, if done the right way, would be a good thing. If we see competitors innovate, if we can see competitors communicate in market-constructive ways, drive incremental spend in marketing dollars, that's a good thing. So we hope to see that.
On the promotion side, we don't really see a dynamic that would point to anyone escalating promotion. We see stable depth of promotion in Europe, a little bit of increase in frequency. In the U.S., we are operating at about 85% business sold on deal, which -- 85% indexed versus pre-COVID level, sorry. That's about 29% of business volumes sold on deal. And we see competitors at similar ranges, so -- and it's stable over a period of time.
So again, if we see market-constructive spend, great. Nobody seems to have an interest in heavy promotion at this point in time.

Operator

The next question comes from Kaumil Gajrawala with Jefferies.

Kaumil S. Gajrawala

I guess as we get towards the end of the call, putting a lot of it together, lots of information on volume, on organic revenue, also why it should get better sequentially. I think putting that in the context of what your earnings have grown year-to-date versus the guidance of 10% to 11% implying almost flat 4Q, I think that suggests a very significant step-up in reinvestment or maybe in something else. So can you maybe just try to reconcile each of those pieces?

Andre Schulten

Yes. Kaumil, the main driver here is the profile of some of the tailwinds and headwinds. I don't expect a major step-up in spend quarter-over-quarter. I think we will sustain good investment levels. And again, as I said, we will be ROI-driven. So it's up to the teams. But I don't expect a step up as the main explanation of why Q4 looks different in terms of EPS growth.
The main driver is a lot of the commodity help has been booked in the front half of the year. And if anything, there's a little commodity hurt coming in Q4. As we talked, oil potentially as reflected in diesel rates, and maybe some of the pulp impact will hit this fiscal year.
And then the foreign exchange rate. So forget about Argentina, I think we've discussed that. But the balance of the foreign exchange rate will mostly hit in the second half, and that's heavily in quarter 4.
And then the last element is just base period. So Q4 last year was very strong because of a different profile. This profile looks a little bit different for the reasons I explained. But don't expect a material change in spend behavior. It's really more of the macro drivers that impact the profile.

Operator

The next question comes from Mark Astrachan with Stifel.

Mark Stiefel Astrachan

One follow-up on SK-II. Last quarter, you talked about your research suggesting that brand sentiment was improving. I didn't hear that. I guess, is that still the case? Are you still doing more work on what's going on, I guess, specific to what's happening in China?
And then more broadly, reinvestment has just been considerable this year, obviously, because gross margin has expanded or at least some part against gross margins have expanded so much and allows you to do that. As you think about the setup from here, commodities unknown, but probably not as big of a tailwind, net-net, and pricing clearly not as big of a tailwind as it's been.
So as you go into next year and you presumably have a little less gross margin to play with, how do you think about what the reinvestment levels look like? And then what is the contribution? I mean, I know it's a squishy question. But how much contribution do you think you've had from 300-plus basis points of reinvestment back in the business to drive share volume, value, et cetera?

Andre Schulten

Yes. Mark, on SK-II, I think the brand sentiment has been sequentially improving. The work the team is doing on innovation, on communication and credentialing, I think, is resonating with the consumer. And as the overall sentiment towards Japanese brands is improving, we are also getting a bit more bold in the breadth of the communication, the reach and frequency that we use. So I think all of that is pointing in the right direction.
As I mentioned, I think the order behavior might lag. So we might see improvement in consumption before we see improvement in shipment. So that's why I was cautioning that, while we see consumer sentiment improving, that first has to translate in increased consumption, and that then has to translate into increased orders and shipments, and that will take some time. So the team is doing the right work, and I'm glad they're actually doing it in a very balanced way to ensure that we're rebuilding this brand for the long term.
In terms of spending, I think this will really be done business by business, geography by geography, so to give you an answer. The only thing I'd point to is we are planning on significant productivity to continue in the marketing spend area. So that in and of itself would be somewhere between $400 million and $500 million of productivity in the space. That is always up for discussion. Do you reinvest or do you flow it through? And it will really depend on the level of innovation we are able to drive. More innovation means more spend and hopefully better return.
And I'll leave it at that in terms of the ROI. I think I've answered the question before. It's there in the aggregate discipline of the categories. But I wouldn't want to go into more detail. I think it's really down to the category country combinations at which we measure it and at which those decisions are made.

Operator

Today's final question comes from Brett Cooper with Consumer Edge Research.

Brett Young Cooper

I wanted to follow-on to Nik's question. Over the last 2 quarters, some of your peers or competitors have talked about elevating their rate of growth. And you touched on this a bit before, but I was hoping you could talk about the opportunity or capacity for category growth rates to elevate further if more players are deploying a strategy than you execute. And how do we see that come through with respect to volume, price, or mix? And then just finally, if there's anything that you need to do with respect to elevating innovation or do anything in light of what may be a more competitive environment on that front.

Andre Schulten

Yes. Thanks for the question. Look, I think if more of our competitors adopt a market-constructive strategy and innovate and spend in that way, that's good for everyone. And if you look at the category development globally, there's still so much opportunity to grow, even in the most developed markets, to grow category penetration in places like fabric enhancers. So that is a big opportunity in many of the markets where we play. The category development index is index 30 or maybe slightly higher. So there's plenty of opportunity to be market-constructive. So that's a good thing.
We are constantly looking at our superiority and our innovation that's inherent in the strategy of Irresistible Superiority. So we've talked about resetting the bar. We've done that with exactly that in mind: What will it take for us to continue to be market-constructive, win consumers for the next 5 years, instead of just looking back at the success we had over the past 5 years. So that is part of the growth model and part of how the organization operates.
All right. Thank you for your time today. If you have additional questions, John, myself, will be available during the day. Thank you for your time and thank you for your interest.

Operator

This concludes today's conference. Thank you for your participation. You may now disconnect, and have a great day.