Toilet paper and premium products aren't two terms typically used in the same sentence, unless you are talking about Procter & Gamble (NYSE:PG).

It wasn't too long ago that P&G was generating 20% net sales growth on a quarterly basis. Back then, higher prices and increased quality were P&G's strategy for success.

Fast-forward five years and private labels are becoming more competitive as consumers trade down to save money. Combine that with fluctuating global currency exchange rates, and Procter & Gamble delivered cascading earnings and sales results for its latest quarter.

For the fourth quarter, net sales dropped 11% -- led by a negative foreign exchange impact of 9% and an organic sales decline of 1%. In the quarter, P&G worked hard to cut operating expenses such as marketing and advertising, and that focus on cost allowed operating income to decrease by only 4%. Still, overall net earnings declined 18%.

Excluding divestitures, volume declined by 4% -- in part because P&G increased prices in developing markets to offset currency effects. For the year, all the company's product segments reported sales declines, with the exception of baby care/family care. The grooming segment was hit particularly hard, with a sales decline of 9%.

It's a tough world right now in consumer products. Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) have served up mixed results with similar global exchange and volume concerns. Consumer-products companies with operations focused on the United States, such as Church & Dwight (NYSE:CHD), have certainly performed better than average -- without the added difficulty of a strengthening U.S. dollar.

P&G is forecasting up to a 3% decline in organic sales for its first quarter, while it expects full-year organic sales growth from 1% to 3%. Even with this not-so-savory forecast, I still think P&G is a decent long-term investment.

The company definitely has challenges ahead in trying to balance price increases, volume growth, and cost control in a new world where consumers may not value brand-name toilet paper. However, considering that P&G's trailing-12-month price-to-earnings (P/E) ratio is 12.2, versus the industry average of 15, the company doesn't look like a risky gamble right now even with the new  pressure from generics.

Still, if you're worried about trade-down exposure to P&G's higher-priced brands, you can always look into companies, such as Church & Dwight, that offer cheaper brands or play the private-label game with companies such as Ralcorp Holdings (NYSE:RAH) or even Kroger (NYSE:KR), which derives significant sales from private labels.

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Procter & Gamble, PepsiCo, and Coca-Cola are Motley Fool Income Investor selections. Coca-Cola is an Inside Value pick. The Fool also owns shares of Procter & Gamble. Looking for more advice in an all-consuming market? Give the Fool's newsletters a try via the 30-day free trial.

Fool contributor Colleen Paulson owns shares of Procter & Gamble and is a former Procter employee but does not hold positions in any other companies mentioned above. The Fool's disclosure policy is always at a premium.