Church & Dwight

Overview

Church & Dwight is a consumer goods company best known for Arm & Hammer brand (baking soda, toothpaste) and OxiClean laundry detergent. The company positioned itself as a discount/secondary brand that would benefit from consumers trading down during economic difficulties.

The K-Shaped Problem

Terry Smith explained at the 2026 AGM why Church & Dwight became a detractor for Fundsmith:

"People at the top of the K are doing very well and they don't buy Church & Dwight products. And people at the bottom of the K are doing very badly and they're trading down to own-label, or nothing at all in some cases."

The theory was that during tough times, consumers would "trade down" from premium brands to Church & Dwight products. But in this K-shaped recovery:

1. Upper income consumers — too wealthy to buy discount brands, buy premium instead
2. Lower income consumers — so squeezed they skip mid-tier and go to store brands or nothing

This leaves the middle (where Church & Dwight sits) squeezed from both directions.

Smith's Assessment

"We currently do not intend to sell the product. It will come right. I think this is a company which is very well set up to handle the fact that people at the top of the K will probably be trading down at some point. But we will wait for that."

Key Points

• Brands: Arm & Hammer, OxiClean
• Problem: K-shaped economy fails to deliver expected trade-down benefit
• View: Waiting for conditions to improve
• CEO quote: "If you believe me and buy my stock, it's your problem"

Related Concepts

• k-shaped-economy — Why this company is suffering
• consumer-behavior — Understanding spending patterns