The Water Testing Market Must Have More Competition

The Water Testing Market Must Have More Competition

The Water Testing Market Must Have More Competition

  • Hach, a Danaher company, has achieved a dangerously high percentage of market share in the water testing market.
  • Hach has achieved this position by adopting aggressive marketing and sales tactics that kept competitors from gaining a foothold in the market.
  • Hach was not the first company to enter the water testing market - not by a long shot!
  • Lovibond and Taylor Technologies have been in this space for far longer, and both offer equivalent products or better technologies at much better pricing.
  • Lovibond and Taylor are not plagued by the same production problems Hach has experienced, and offer good ways to fill the gaps Hach creates when their products are on extended backorders.
  • Hach has implemented policies that bar resellers from buying their products through major distributors. This practice harms distributors, resellers and end users, and it appears likely to spread to other Dannher companies.
  • Consumers need to push back against these policies to prevent a monopoly from forming.

Background

Virtual monopolies are not unique to the lab market; however, in this space we see a number of companies who have become so dominant that they have nearly eliminated their competition.  Thermo Fisher may be one company that comes to mind, but I am referring to Hach. Since 1999 it has been owned by Danaher, a $30+ billion dollar conglomerate nearly as large as Thermo Fisher. 

Water is probably the most tested substance on Earth.  From effluent water to drinking water to boiler water and pool water, tens of thousands of tests are done daily by all types of labs and even homeowners.

Hach was founded in 1947 by Clifford and Catherine “Kitty” Hach in 1947, in Loveland, Colorado.  Today, thanks to the billions of dollars invested by Dannaher and numerous acquisitions, it is a global company that dominates the water testing market.

How did Hach get to this level of market dominance?  What is their strategy to increase market share?

 

The climb to the top.

Prior to the Clean Water Act of 1977 Hach sold chemicals and manufactured a few instruments. After the Act was passed, their entire focus shifted to creating simplified water testing methods. They worked strenuously to keep competitors out of the market they dominated by:

  • Convincing customers that their kits were the only “EPA Approved” kits. EPA approval was never required or even offered. The EPA published approved methods, but never included any particular brand.
  • Steadfastly insisting on selling direct to end users and not through distributors.
  • Filing numerous broad patents and aggressively defending them in court.
  • Deploying an aggressive sales force that called on the water / wastewater customers and sponsored all the water testing shows and seminars.

The predictable result was that Hach was the only name many customers knew for water testing for years. No other competitor, even Thermo Fisher’s once premier Orion division, could capture any more than a small piece of market share.

Hach was not the first company in water testing.

Anyone who has visited Germany knows that these folks love beer and engineering.  Beer is mostly water and as far back as 1854, Joseph Williams Lovibond left England  at age 13, went looking for gold in Australia and somehow ended up back in his father’s brewery in Salisbury. It’s a great story which you can read about here. Suffice it to say that Lovibond has a far longer history focusing on water quality than any other company - including Hach. From 1985 to 2000, Lovibond became a dominant water testing player in Europe.

In 1930, W. A. Taylor & Company was the brainchild of Dr. William Taylor, Fred McCrumb, and Dr. George Miller, in Baltimore, MD. This company, up until 1967, was primarily focused on the Pool and Spa market. In 2017, Stephen Heard, with 27 years experience in the water treatment industry, refocused Taylor’s product line to give Hach a real run for their money. Their interesting history is told here.

Taylor has many innovations to its credit such as liquid DPD reagents. However, their big advantage is that their kits are broad in scope and easy to perform by people in the pool/spa business. Learn more about Taylor via video here.

LPS is an authorized distributor for both Lovibond and Taylor Technologies. Since Hach’s decision to stop selling to resellers, it is our mission to help our clients find better, less expensive alternatives to Hach. 

How Lovibond and Taylor compete with Hach.

Lovibond US, located in Sarasota, Florida, and managed by many scientists who were formerly trained at Hach, have decided to market exact replacements for many of Hach’s testing chemicals -  their Vario product line. By searching for the Hach product number on the LPS website, you will be able to find the Vario item you are looking for, if one exists. Or you may consult the cross reference table here.  

Talor offers an incredible selection of kits for a host of analytes, listed here.  All of these individual reagents are available individually, and can be found here. A complete line of instruments such as calorimeters are listed here. Test strips for many substances can be found here.

Rather than just copying Hach’s methods, Taylor’s design philosophy has always been to make kits that even a layperson can perform and get fast, accurate results because they came from the pool/spa market.

Of course, you will find all of the Lovibond and Taylor products at great prices on LabProServices.com.

Key reasons why customers should consider brands other than Hach.

  • To bring competition to the market. During and after the pandemic Hach had severe backorder issues.  In spite of the fact that Lovibond had equivalent products at significantly lower prices, many customers made the decision to just wait out the backorders rather than try a different product. Without competition and with extreme brand loyalty, Hach had little incentive to keep prices low, nor did they need to worry when manufacturing issues caused shipping delays.
  • To foster innovation. Without a competitor nipping at your heels, where is the incentive to innovate? Competition drives innovation. Monopolies have little reason to change.
  • To have two sources of supply. Having at least two qualified suppliers is a requirement for many FDA-regulated companies. Why?  To ensure that if supplier No. 1 has any issues, you have pre-qualified supplier No. 2 to immediately fill the gap. In many cases, you will find No. 2 is better/faster/cheaper than No. 1!  It’s just good business and it breaks the logjam of blind brand loyalty.

Are all Danaher companies implementing the same policies as Hach?

The policy I am referring to here is banning authorized distributors such as Thermo Fisher, VWR and Thomas Scientific from selling Danaher products to resellers. Obviously this is a very harmful policy to the reseller but it also robs sales from the distributor and is a strong incentive for the reseller to embrace competitors. Since most of the Danaher companies either won’t entertain new distributors, or set such a steep financial commitment to become a distributor, that they effectively guarantee no new competitors for existing distributors.

When you couple this tactic with MAP (minimum advertised pricing) policies,end users will end up paying higher prices, with fewer places to buy.

Many of the Danaher companies are adopting this policy. Their recent acquisition of Cytiva (formerly GE / Whatman) and Pall Life Sciences (two of the three major players in the filtration business), will only add to the huge financial blow experienced by  resellers and consumers alike.

Why are they doing this? The only plausible reason I see is to keep resellers from exporting these products into markets outside the U.S. where they have exclusive distribution agreements in place. It’s like taking a sledgehammer to swat a mosquito.

How you can fight back.

Don’t be a slave to a brand.

Do you always shop only at Shell gas stations? Do you only trust Shell brand gasoline to fuel your vehicle?  Of course not. Chemical testing is no different. If you use the same methodology and the same chemicals, purchased from a widely used brand, you can count on the same quality of results.

If you see a company representative at a trade show, tell them you don’t like companies that restrain trade!

The most direct way to get a company to listen is to tell them you aren’t pleased at a trade show.  Seek out a Hach manager and tell them you don’t like being forced to buy products from a particular distributor..

Stop buying from them.

The best negotiating tactic of all remains walking away. Take your business to a competitor like Lovibond or Taylor. When Hach’s sales decline, they will make changes. And of course, you will save money!

At least consider and validate alternative products. It may be a little work now, but it is an investment worth making.

Summary

The laboratory supply industry consists of nearly 10,000 small manufacturers of eight employees or fewer in the U.S. And, a handful of gigantic corporations control much of the market and own scores of premium brands. These giants are rapidly approaching a monopolistic market position.

To achieve a monopoly, you must be very shrewd about how you play the game. If you make moves that are too large, you will tip your hand and you may lose market share before achieving market dominance.

Lab consumers are already experiencing the financial impact that these near-monopolies have created. Since the acquisition of so many premier life science companies by Thermo Fisher, culminating with Life Technologies, discounts on these products are now a distant memory. You pay full list price plus a host of fees (e.g., dry-ice overnight shipping) or you are forced to go to another brand. These companies know you won’t.

If this trend continues and routine supplies like reagents and filtration products are only available from a select few distributors at list price… This is not a development that will be of benefit to anyone.  We all need to take steps to reverse this trend.

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