Moneybox

COVID-19 Isn’t All Good News for Purell

Can the company keep up with demand—and maintain its dominance in the hand sanitizer market?

Hand sanitizer about to be squeezed into an open hand, seen in a stock market graph with a zigzagging line.
Photo illustration by Slate. Photo by Kelly Sikkema/Unsplash.

The following article is a written adaptation of an episode of Thrilling Tales of Modern Capitalism, Slate’s new podcast about companies in the news and how they got there.

Several years back, David Owen got to tour the headquarters of the company that makes Purell. “All the employees have little bottles of Purell hanging from their belts, almost all of them,” he said. “There’s Purell on every desk. And it all seemed sort of unnecessary because you can barely walk 10 feet without passing a dispenser.”

David’s story about Purell ran in the New Yorker in 2013. Back then, pandemics weren’t top of mind for most Americans. It turned out the people who make Purell were way ahead of the curve when it came to anti-viral hygiene.

“I think the thing that struck me about everybody I met there [was] people were constantly rubbing their hands,” Owen told me. “They’d squirt some Purell onto their hands, and they’d be rubbing it. People with very, very clean hands in that company. I’m sure you could touch any surface there and not have any concern at all about whether you were picking up any kind of infectious agent. It’s got to be one of the cleanest places around. And, in fact, they have a very low employee absentee rate for that very reason—they just don’t get colds as often as people typically do.”

Of course, these days, it’s not just manufacturers of hand sanitizer who are acutely aware of the importance of keeping clean. “Going to the grocery store, you [used to] feel self-conscious about using the Purell dispenser by the door,” Owen said. “Now I don’t.”

Purell was invented in 1988, and for the first decade of its existence, the product lost money. People didn’t see any reason to buy a special goop for cleaning their hands. Purell eventually became profitable, but nothing in its history compared with what happened when COVID-19 arrived in the world. People were suddenly willing to pay exorbitant sums for even small amounts of Purell.

“A friend of mine spent $80 a month ago to get two tiny bottles of it shipped to him, and they actually came,” Owen told me. “He bought maybe $10 worth of Purell for $80. And now he says it’s much too valuable to actually use.”

In response to what they call a “dramatic expansion in demand,” the makers of Purell have ramped up their manufacturing. They’re operating 24 hours a day, seven days a week, in order to meet the world’s newly insatiable craving for hand sanitization.

Before this pandemic, the story of Purell was mostly a story about innovation, about inventing something people needed before they realized they needed it. Now, it’s a story about something every business executive dreams of: a sudden influx of customers desperate to get their hands on your products. But what happens when demand for a product surges so fast that the leading brand can’t produce enough of it? You get scarcity and price gouging, and other companies jump in to fill the gap.

Businesswise, it might seem like the coronavirus is the best thing that ever happened to Purell. But when life returns to some level of normalcy, Purell might discover that this moment has birthed a whole raft of new competitors, rivals born of necessity and honed in a time of crisis. Will there still be enough unclean hands to go around?

The Ohio-based company that makes Purell was founded in 1946. It’s called Gojo, named for its co-founders Goldie Lippman and her husband, Jerry Lippman. “Goldie had worked in a rubber plant, and in a rubber plant, people’s hands get filthy, and the workers there were cleaning their hands with benzene, which you don’t even want to be near, and they’re washing their hands with it,” Owen explained. “The women especially hated what it did to their skin. So Goldie and Jerry came up with this hand cleaner that didn’t give you cancer and didn’t burn your skin off.” That product, called Gojo, is a heavy-duty hand cleaner that’s used to this day in places like car repair shops, where workers’ hands get covered in thick grease and oil.

Heavy-duty hand cleaner was the company’s staple product for decades. In the 1970s, Jerry and Goldie’s nephew Joe Kanfer took over as CEO of Gojo, and it was Kanfer who presided over the development of a new kind of hand-sanitizing gel, one that was less goopy than Gojo’s previous products and was meant to clean off germs, not motor oil. Kanfer called this new product Purell.

Purell’s early adopters were mostly health care professionals. Doctors and nurses discovered that it was a more convenient and efficient way to clean their hands. Kanfer finally introduced Purell to the wider consumer marketplace in 1997, almost a decade after its invention. In 2002, the Centers for Disease Control and Prevention endorsed alcohol-based hand rubs as an effective way to fight germs—and that was the benediction that Purell needed. Sales steadily grew as Purell bottles made their way into soccer moms’ purses and Purell dispensers popped up at large gatherings of all kinds.

The military became an important customer, as did other big institutions. Gojo says Purell is the No. 1–selling hand sanitizer in America, which is maybe not surprising since it’s the product that created the category. Seventy-four years after its founding, Gojo remains a tightly held family-owned company. It doesn’t release its sales numbers, but at least one estimate suggests that Gojo’s revenue in 2018 was about $370 million and that the company was worth about $1 billion. But that was before COVID-19.

Gojo says it has an in-house group that monitors public health situations around the world. The company became aware of this new emerging coronavirus pathogen in December and immediately activated what it calls its “demand surge preparedness team.” It may not have been able to predict the course of the COVID epidemic, but it knew one thing: When people heard about a deadly new germ that was spreading around the world, they would start hoarding hand sanitizer. And that’s just what happened.

The Food and Drug Administration has tight rules about the claims companies can make when it comes to fighting diseases, and Gojo isn’t allowed to say that Purell is effective in killing the coronavirus—but the company doesn’t really need to. The CDC recommends using hand sanitizer if soap and water aren’t available, and Purell is so deeply associated with fighting germs in consumers’ minds that plenty of them made the connection themselves.

Gojo hasn’t released any hard numbers, but the company says it started ramping up Purell production in January, adding workers operating around the clock and moving product at a record pace. The bulk of that product has been reserved for health care workers and first responders around the country—people who need to clean their hands while on the move. Gojo says it’ll make Purell available to places like convenience stores, where regular consumers can buy some “when it is able”—which leaves a gap in the marketplace. That gap has led to some price gouging, with bottles of Purell selling for obscene prices online. But it’s also led to new competition.

Matt Cunningham is the co-founder of the Old Glory liquor distillery in Clarksville, Tennessee, about 45 minutes north of Nashville. He makes bourbon and whiskey and other spirits, and he also hosts things like weddings in the distillery’s event space. Early on in the coronavirus crisis, Cunningham was having trouble finding any hand sanitizer for himself or for his employees, so he wondered if they could just manufacture some. Hand sanitizer is mostly alcohol, and a distillery knows plenty about that. He started looking into it.

The process of making hand sanitizer is “a lot easier than making whiskey,” Cunningham told me. “When the World Health Organization issued the guidelines, they were very specific on what those ingredients could be that went into this specific formula that we’re allowed to use. The FDA followed up with the exact same. It’s ethanol, glycerin, and hydrogen peroxide.”

At first, Cunningham and his team donated their hand sanitizer to local first responders and health care workers in Tennessee. But soon they were getting requests from all over the country, and from businesses too. At that point, they couldn’t afford to keep giving it away, so they started charging, though Cunningham says it’s a below-market price. They’ve gotten so many orders that they’ve had to double their staff to keep up. “Most people have had to lay people off,” he said, “and we’re very fortunate that we’ve had the opposite.”

So the hand sanitizer business is keeping Cunningham’s people employed and even creating new jobs. Making sanitizer is a quicker process than making whiskey, and Cunningham’s already got all the tanks and special equipment he needs. And although there would usually be a lot of regulatory hurdles involved in making a product like this, because of the crisis, the FDA slashed the time it took to get approval, so no problems there. So I wondered: If and when things go back to some kind of normal, will Cunningham keep making hand sanitizer?

“Right now, we don’t have a definitive plan to do that,” he said. “But, as this goes on, we don’t think that hand sanitizer is gonna go away. We know this product that was something that you saw sporadically is now something that’s gonna be a staple, and this may be something that we look into keeping around in the long term.”

So this pandemic has sent hand sanitizer demand through the roof, and that might be a lasting effect if we keep cleaning our hands with great frequency, even after the virus fades. This is great for Purell. Gojo invented this product that’s turned out to be incredibly useful in a moment of crisis, and the market is rewarding the company for it. But a rising tide can lift a lot of boats. The barriers to entry to the hand sanitizer market aren’t very high right now. Demand is soaring, regulation is eased, and Matt Cunningham is far from the only person to have the idea of pivoting to hand sanitizer.

What happens if the tide goes back out and demand slows down a bit? Will Purell maintain its dominance in this category? Or will one of these upstarts, born in a moment of need, turn out to have staying power? It’ll be a challenge for the newcomers. Purell had a long head start and built a brand so strong that, like Kleenex, its name is synonymous with its category, but Matt Cunningham thinks he’s got at least one advantage.

“To be honest, the aroma of ours is much more pleasing to me,” he said. “It’s an ethanol base that really kind of smells like the distillery. It’s a little bit different than the chemical-y smell that you get from hand sanitizer sometimes.”

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