The Battleground of Automatic Dishwashing

Globally, automatic dishwashing (ADW) continues to be led by Reckitt Benckiser and its eponymous Finish brand, which generated value sales of US$2.1 billion in 2013, three times those of Procter & Gamble’s Cascade brand and over 10 times the sales of Fairy (also owned by Procter & Gamble).

Although its global value share plateaued at 37% in 2013, Finish has grown strongly over the last decade, up from a 30% value share in 2004, with the best performances in 2007 and 2008, when the economic boom encouraged consumers to purchase dishwashers and trade up to Finish Quantum, released at the tail end of 2005. While the brand continued to see value sales grow even during the recession, although at a reduced rate, most notably due to a downturn in the US ADW market in 2013, the Finish brand has been somewhat unaffected by the recession or the threat of private label, which might have been predicted to derail its development.

While private label might still be considered a threat, rival brands Fairy and Cascade, although trailing, are fast becoming a notable challenger with packaging one way to achieve on-shelf differentiation. How long can Finish hold onto its throne? Euromonitor International investigates.

Fairy Improves its Competitive Position

Finish’s leadership in ADW was cemented in 1999, with the launch of Finish Powerball, a single-dose multi-functional product marrying form and functionality, which proved a significant technology barrier for many competitors, and also served to block private label development in Western Europe. To date, Finish has arguably maintained its lead in product development with Finish Quantum PVA packaged powder, which retains its red “Powerball” motif, and promises even greater levels of functionality.

While Fairy still lags some way behind Finish in terms of value sales, Fairy is by far the most dynamic brand in terms of growth, increasing at a 20% value CAGR over the past decade (2004-2013) to capture 3% of global value sales of ADW in 2013. Certainly, the brand has some advantages over Finish, given its long association with hand dishwashing, in which Fairy is the global leader.

Fairy’s major gain came in 2009/2010 when Procter & Gamble introduced Fairy Platinum in Western Europe, with (at the time) a novel powder and gel combination. Packaging saw resealable pouches hit the shelves, which, at once, was a point of difference on cardboard-boxed style packaging, which typified the ADW category at the time. Fairy then extended its portfolio to cover both the premium and value ends with its Fairy Platinum and Clean & Fresh ranges respectively, helping to cater to consumers of various budgets, making Fairy potentially a strong contender against the leader Finish.

The changes Fairy has made seem to have caught consumers’ attention, particularly as Fairy Platinum has also been rated the number one brand by influential Which? magazine in the UK for three years running (2010-2013). Fairy has also seen strong sales growth and expanded its value share in the UK from 4% in 2004 to 13% in 2013. It is interesting to note that, in 2013, Reckitt Benckiser also introduced the resealable packaged Finish Power Gel range, a powder and gel combination format similar to that of Fairy’s. It seems that the world’s leading ADW brand is developing to more closely mirror its rival Fairy, which could be pointed out as a change to the status quo.

Dishwasher Penetration an Obstacle

That said, with dishwasher penetration stagnating in the developed Western world, it is still difficult for Fairy to gain sufficient new business to be able to rival Finish. Looking at the UK market again, while Fairy leads the hand dishwashing category with a prominent 61% value share, it still lags far behind Finish’s 54% value share of ADW in 2013. Brand loyalty remains high in ADW and if Fairy needs consumers to switch brands in order to gain stronger share, it needs a good enough reason, one similar to which Fairy may have well learnt from its sister Cascade in the US, where a phosphate ban has led consumers to turn their backs when phosphate-free Cascade at least initially delivered poor results.

With a phosphate ban expected by 2017 across the EU, this would give Fairy a rare opportunity to take advantage of potential market changes. Further afield, with Finish’s business focus very much concentrated in the world’s developed markets, Fairy is in a better position to look to less developed markets for longer-term business growth, given its broad international presence, with its hand dishwashing alternative ranking top in Eastern Europe, and the Middle East and Africa, as well as a few developing countries in Asia Pacific. In Latin America, should Procter & Gamble looks to develop its ADW, Fairy’s sister brand Cascade was well positioned to cross the border.

While penetration of dishwashers in emerging markets may still be very low, it is more cost efficient in converting consumers from hand dishwashing to automatic versions as they trade up, comparing to converting from using a different brand. As Fairy may have already stolen a march by enjoying a strong consumer base in emerging markets, it may need to review its marketing approach in ADW to make a breakthrough in order to convert its hand dishwashing consumer base into the automatic field and become a real challenger. This would involve a deep understanding of consumer perceptions of automatic dishwashers in emerging markets, with a view of collaborating not only with machine manufacturers but also with property developers who are key to driving the platform from which automatic dishwashing sales could really take off. Until then, Finish is likely to continue to enjoy a leading position in the global ADW market.