Roy Davidson, 25 January 2019



Ecolab (ECL) is a global leader in water treatment, hygiene, and energy technologies and services. The company’s core business model is the delivery of comprehensive programs to promote safe food, maintain clean environments, optimise water and energy use, and improve the operations of its customers.

Customers and end markets served

ECL’s primary end markets are foodservice, hospitality, food & beverage processing, healthcare & infection prevention, industrial water services, and energy. The company’s strategy is to wrap a variety of products and services around its existing blue chip customer base, and to grow abroad as its customers expand around the globe. Over 90% of the company’s business is conducted on a contractual basis, and is thus reoccurring in nature.

Heavy investment in Research and Development

ECL combines a portfolio of products with high levels of intellectual property (similar to 3M), with an outsourced business services model (similar to Bunzl), to deliver a rare combination of above market growth, high profit margins, and defensive cash flows. At its core, ECL is a chemical formulation business that shares many commonalities with 3M. The company invests heavily in research and development in order to create new chemical formulations which provide critical functional qualities to customers. However, the company’s core value proposition to its customers is best understood as an outsourced business service model, whereby ECL seeks to help clients reduce costs, decrease operational complexity, and prevent business interruption. In this way, the company bears a strong resemblance to Bunzl.

A combination of expertise in materials sciences and strong technical expertise

ECL relies heavily on its expertise in chemical formulation and the technical expertise of its unparalleled sales force to deliver improved outcomes for customers. The company has 25,000 employees operating in its field sales and service force. This technically trained and outcome oriented sales force (which has been decades in the making) is a key competitive advantage for the company. The company serves both large and small players in a number of industries, but strategically ECL wants to serve the biggest players in all of the industries it serves. The company’s global sales force is a particular advantage in winning business from large multinationals.

Investment view

A strong growth profile should allow ECL to perform well should the global economy continue to perform well as we expect. However, should growth slow or market volatility return as global central bank support wanes, the defensive nature of the company’s cash flows have historically resulted in ECL selling off less than the broader market.


  1. higher raw material costs
  2. weak end markets
  3. increased competition