The Tide Economy

Let's look at a different kind of alternative economy. There's a lot to talk about: poverty, marketing, branding. Here are the main points of the article. (As always click the heading to go to the actual article, in this case, from New York Magazine.)

Suds for Drugs
The grocery store, located in suburban Bowie, Maryland, had been robbed repeatedly. But in every incident the only products taken were bottles—many, many bottles—of the liquid laundry detergent Tide. “They were losing $10,000 to $15,000 a month, with people just taking it off the shelves,” recalls Sergeant Aubrey Thompson, who heads the team.
What did thieves want with so much laundry soap? To find out, he and his unit pored over security recordings to identify prolific perpetrators, whom officers then tracked down and detained for questioning. “We never promised to go easy on them, but they were willing to talk about it,” Thompson says. “I guess they were bragging.” It turned out the detergent wasn’t ­being used as an ingredient in some new recipe for getting high, but instead to buy drugs themselves. Tide bottles have become ad hoc street currency, with a 150-ounce bottle going for either $5 cash or $10 worth of weed or crack cocaine. On certain corners, the detergent has earned a new nickname: “Liquid gold.” The Tide people would never sanction that tag line, of course. But this unlikely black market would not have formed if they weren’t so good at pushing their product.

Prestige Item
Shoppers have surprisingly strong feelings about laundry detergent. In a 2009 survey, Tide ranked in the top three brand names that consumers at all income levels were least likely to give up regardless of the recession, alongside Kraft and Coca-Cola. That loyalty has enabled its manufacturer, Procter & Gamble, to position the product in a way that defies economic trends. At upwards of $20 per 150-ounce bottle, Tide costs about 50 percent more than the average liquid detergent yet outsells Gain, the closest competitor by market share (and another P&G product), by more than two to one.

Tide’s original scent was “citruslike,” in the words of Sundar Raman, the marketing director of Procter & Gamble’s North American fabric-care division, but has evolved into a “citrus, floral, and fruity experience” with hints of lemon, orange, roses, lily, and apple. When combined in a complex perfume, these notes help cover up the odors of the cleaning agents that would otherwise waft out during the wash cycle. But P&G also chose each scent to do a specific job. The smell of citrus, for instance, has been shown to correlate strongly with perceptions of cleanliness. “That natural, fresh-and-clean smell is stimulating and creates an instantaneous mood of being happy,” says Craig Warren, a former researcher for the firm International Flavors & Fragrances who, until the late nineties, did work with P&G. Floral scents, for their part, have been known to evoke strong feelings of maternal love and kinship. (Home visits by Saatchi researchers have found that very ardent Tide fans sometimes carry bottles as if cradling a baby.)
The goal of all these efforts is to turn clothes-washing into more than a to-do; it’s being a good parent, a good person. It’s a message that may also explain why among some lower-income shoppers, according a 2012 newsletter by branding agency Daymon Worldwide, “being able to afford Tide laundry detergent is seen as a sign of success.”

Hard to prevent its theft
Bulk goods like detergent are harder to run off with, but they’re also bought by dozens of customers daily—lock those products up, and a store manager adds more time to his customers’ errand runs, potentially sending them to shop elsewhere. “Any time you secure something, it impacts the sale of that item at some level,” says Jerry Biggs, the director of Walgreens’ Organized Retail Crime Division.
Cashiers and stockists, working for low pay, are often disinclined to confront a potential criminal. “People at the cash register don’t stop you,” says one of Thompson’s informants, an ex-con who shoplifted for years. “They just let you go past.” What’s more, stolen bottles of Tide aren’t easily traceable. Many merchants don’t record the lot and batch numbers for most grocery-store products, because that takes precious man hours. And Procter & Gamble has not made its own database of that information publicly available. Some stores have tried attaching tracking stickers to bottles to establish their provenance, only to find that thieves just wash them off.

Branding is Addiction?
When shoppers are exposed to a brand they identify with, their ventral medial prefrontal cortex lights up—the same part of the brain associated with reward recognition in drug users. That neural pathway may have helped our ancestors remember, say, which plants were safe to eat or when a tribal marking meant a clan was worth avoiding. In the modern age, we use the same circuitry as a shortcut for more mundane decisions.

The Tide alternate economy
Thompson … and his fellow officers pieced together a loose network of middlemen—barbershops, nail salons, and drug houses that were taking in bottles to either sell on the side to their clients or at a deep discount to willing corner stores and pawn shops.
Despite its popularity, Tide is not a big moneymaker for stores. P&G’s proprietary surfactants and enzymes are relatively expensive to produce, notes Bill Schmitz, a Deutsche Bank analyst, so Tide’s wholesale cost is steep. Only so much of that can be passed on to customers. “It’s so tight,” says Schmitz of the profit margin. In general, a retailer clears just a few percentage points on a Tide purchase. A store that charges $19.99 for a 150-ounce bottle might claim $2 in profit. But if it buys stolen bottles for $5, that jumps to $15.
It’s not just bodegas that hawk iffy product. Chain stores also wind up in resale schemes. Rather than stock large surpluses of popular items, those businesses often rely on so-called perpetual-inventory systems to electronically record sales data and relay it to manufacturers, which stagger deliveries accordingly. When a bottle of Tide is taken from a store without being rung up, a crucial step gets skipped, leading to shipment delays. And when that happens, some store managers place stopgap orders with local wholesalers who may be less than rigorous about where they obtain their products or from fencing rings that employ their own sales teams and maintain legitimate-looking websites. “Some stores might not recognize these goods as stolen, but others don’t really care,” says LaRocca. “There are [stores] who don’t ask questions about where the goods originated. Plenty are just looking to fill their shelves.”

Tide thinks it's great
For its part, Procter & Gamble doesn’t seem overly concerned about the black-market popularity of its product. “It’s unfortunate that people are stealing Tide, and I don’t think it’s appropriate at all, but the one thing it reminds me of is that the value of the brand has stayed consistent,” says Raman, the marketing director.
Now the company’s tactics for maintaining the brand’s premium status are evolving. One recent commercial for the detergent shows a young couple watching TV. The boyfriend mentions that his girlfriend wanted him to use Tide with Downey to make his shirts soft. The punch line: She’s fallen asleep on his stomach. “And was she right? The proof is in the snoring,” he says.
That promotion, part of a campaign called MyTide, is emblematic of the way Tide’s target demographic has expanded since the brand’s inception. Tide isn’t just for stay-at-home moms anymore. It’s for single guys—and, as other commercials show, for a woman who wants to resurrect her “nasty, vile” old tennis shoes, or the parents of triplets, folding clothes in a crowded bedroom, who consider their kids “such a blessing” but “not financially,” or anyone looking to stretch their dollars. Says Kopelowicz of Saatchi & Saatchi: “Some people, just because they can’t afford Tide all the time, they might think the brand doesn’t understand you. Of course we understand you.”
Fashion trends might be ephemeral, but—if you buy into Tide’s branding efforts—clean clothes, no matter what kind of clothes they are, are essential to your well-being, or even to your sense of self-worth. “It makes you feel prepared, like your priorities are straight,” Kopelowicz says. It just happens that the high demand for Tide that message fuels also sustains criminal enterprises.

If all that makes Thompson’s job harder, he doesn’t blame Procter & Gamble. “I’m a No. 1 Tide fan,” he says. “I don’t know if it’s all psychological, but you can tell the difference.”