How Tide Detergent Became a Drug Currency
nymag.com
nymag.com
TL;DR version - Laundry Detergent is pretty fungible, everyone needs it, and its difficult to trace, unscrupulous retailers will buy stolen tide for cash.
This situation provides crooks with a couple of benefits, one they can separate the money trail for selling drugs, after all who thinks this looks like a drug buy:
Alice goes to grocery gets laundry detergent;
Bob sells stolen detergent to a grocery for cash.
Alice goes to grocery gets laundry detergent;
Alice gives Detergent to Bob for drugs.
Bob sells stolen detergent to a grocery for cash.
No, Alice steals laundry detergent. The jugs are going for $5-$10 on the street, but $20 in the store. Nobody is buying the stuff from the store unless they're doing laundry.
Can you explain it in more detail?
If alice is buying $100 worth of Tide, how much $drugs does she get for her $Tide?
How much $cash does Bob get for his $Tide when he sells it back to the store?
How much $Profit does the store get from the $Tide bought from Bob?
Lets say that Tide is $20/bottle so $100 is 5 bottles. She then exchanges that for 5 tide bottles worth of drugs.
The value of the drugs is, by definition, 5 tide bottles.
The article discussed the value of buying stolen tide at a discount against retail in order to get better margins on their sales. The article claimed that the margins were roughly 150% better ($5 vs $2) although that number may have been made up by the author.
Bob prices his drugs in units of Tide bottles, the Store buying stolen tide establishes the exchange rate for Tide to Dollars. There is a 'posted' exchange rate of dollars to tide bottles, although the argument talks about people stealing Tide. This becomes low cost because apparently the store staff is unwilling to call the police, and the police apparently have issues because the monetary numbers are low enough that the crime is a misdemeanor rather than a felony.
So in our scenario Alice is risking getting arrested for shoplifting by stealing Tide bottles, Bob is risking being arrested for drug dealing or trafficking in stolen goods, the store is risking sanctions for buying stolen goods.
The entire point of the article was that because there is so little risk, this process of stealing Tide to buy drugs flourishes as actors in the system arbitrage the risk for cash (or drugs).
Alice doesn't care how much drugs she gets for that, because shop lifting is easier than prostitution and has lighter sentencing than robbing houses.
Bob sells his bottles for $5 each. That means the store can either sell at a big discount for friends, or can make more profit. The margins are not good on Tide.
This is in the article on page 3.
I think your explanation is wrong.
Alice would certainly care how much she got for $Tide, else she wouldn't see it as ($).
Bob is the lowest common denomiator here in that Bob must know that he can get $xY for $Tide from the store... whereas he is going to give minimal value for $Tide to Alice.
This is not only how Bob $Profits, but also how Bob lays low from the Law.
From the article:
>While the driver kept the car idling, a heavily tattooed, spiky-haired detective named Alexander Mallari jumped out holding a laundry bag filled with a few bottles of Tide and lots of bonus items—a dozen pairs of Philips earphones, a dozen or so bottles of Victoria’s Secret perfume. Mallari’s mission was simple: He’d enter the shop, disclose that the items were stolen, and try to unload them.
>Ten minutes later, Mallari emerged with an empty bag and a small wad of money in his pocket. He was offered just $30—a pittance by the standards of the Tide trade. “That’s a true crackhead price right there,” Thompson said.
This is the drug that brought us "smurfing" - addicts would earn drugs by taking very many blister packs of OTC medication and popping the pills out of the blister packs to be used in making drugs.
Bob fences stolen goods from drug addicts because the margins are so good - and the margins are good because drug addicts just want enough money to get more drugs.
Quoting one source: "Total pretax profit for the industry in 2009 was about $5.2 billion," and "Convenience stores’ gross revenue for 2009 was more than $505 billion." "While the average gross revenue per store for cigarettes was about $576,354, the gross profit on those sales was closer to $89,923. Cigarettes are the second highest-ranking profit producers for convenience stores, after nonalcoholic beverages, which provide each store with about 18 percent of its profits." "Motor fuel [...] provides a gross profit margin of only about 6.4 percent"
That puts detergent a bit under the 15% margin for cigarettes, but a lot higher than the margin for the store as a whole, and higher also than the margin on motor fuel.
a) Why would anybody sell drugs? Answer: Money.
b) Why would anybody need money? Answer: To buy some thing useful called X. If X is something like detergent, sugar, wheat even more better.
a) and b) imply in many cases it makes more sense to trade drugs for X than directly with money.
The network seemed to always have one product or another that was used as an informal currency. For years it was the Energizer brand AA battery, then it became prepaid cell phone minutes after one provider allowed users to send credit to each other (this was shutdown).
At one period it was Gillette Mach 3 razors, but then stores started putting them behind the counter so it didn't last long. Cigarettes were always a quasi-currency, I remember the value going from 20c to 50c, and cigarettes being exchanged for everything (and some smaller stores selling or buying them individually).
After I left the school I heard that the market had reverted back to batteries (there was always a battery market, I don't think I ever purchased batteries from a store), after a very brief period where the most shoplifted items in the local supermarket were cuts of meat and meat trays[0].
What these items all have in common is that they can be shoplifted from large supermarkets easily, are portable, easy to store, have a long shelf life (well, not the meat) and are essential household purchases even in poor neighborhoods.
I find interesting that even if you aren't involved directly in the drug trading, you are taking part in the surrounding economy by purchasing or exchanging these goods. I never bought drugs but my friends and I were always buying and trading these goods. I assumed that they would always end up back with the drug dealers somehow, who would find a way to convert them back to cash.
[0] Apparently this is an issue again in Australia - "GROCERY prices are rising because organised crime gangs are stealing hundreds of millions of dollars worth of meat" - http://www.news.com.au/national/organised-gangs-targets-meat...
Edit: an interesting related article from Forbes that came up in my Google search - "Why do people steal meat from grocery stores?", goes into the economics and details of shoplifting and is US-centric: http://www.forbes.com/sites/larissafaw/2012/12/24/why-do-peo...
If they were robbing the stores at knife point, or breaking and entering, the risk is significantly higher. This way they have a low risk, easy to turn over, virtually untraceable scheme, and that is obviously a very attractive thing.
The robbers said that compared to robbing a convenience store etc it made as much cash but the risk was extremely low.
I guess if you're desperate enough that you're willing to commit a crime for $50 then stealing a laptop is a better idea than robbing a convenience store but you still have to be pretty desperate.
Passing morphine withdrawal is an interesting experience. I tried once, and it was by far the most physically intense pain I have ever experienced. Even with the most powerful sedative I could only cry in pain. If I was out of luck and on the streets I'd steal stuff to avoid it again. (Not that I would. Even entry-level coding is enough to avoid a junkie lifestyle. I did it just for the experience. Also, I gave up after a few hours.)
2. Call victim and claim your kid bought stolen laptop for $50 and 'fessed up.
3. Claim you'd give it back for said $50
4. Profit $50.
4a. Appear innocent.
If, on the other hand, the scenario was real, why would I reimburse your kid's foray into stolen goods? He got the $50 in the first place, he spend them on crime, he should "do the time".
Unfortunately, the economics don't work out w/respect to the risks/overhead involved in the theft of said product.
So now the father is in it too ?
The cops were happy to come and take a report but they never seemed all that interested in solving the crime (doubtless its a very low priority). In the other stolen laptop case a wallet was also stolen and the thieves used a credit card at a gas station. We gave that information to the officer but we could never get them to return phone calls. If we had threatened the guy with arrest we probably wouldn't be able to actually back up that threat. Why risk the cost of a new laptop plus the loss in productivity of setting up a new laptop, worrying about what information was on the hard drive, etc?
It's sad to think that a person can get away with a property crime in a medium-sized city and the cops will be indifferent, but that's the way it is.
IMO if youre robbing or stealing then you're generally pretty desperate or have an addiction of some sort.
[edit] this comment's reference: http://news.ycombinator.com/item?id=5024191 suggests that my local Duane Reade may have simply fallen victim to paranoia induced by a viral and perhaps inaccurate news article. I'm inclined to investigate further.
[edit again] the end of the article mentions another Duane Reade in NYC that had someone steal a great deal of Tide detergent. I now wonder if there is, in fact, a black market for tide, or if this thief fell victim to viral misinformation, causing Duane Reade (equipped with the same misinformation) to also over-respond.
I see a lot of weird shit on the internet, I generally like my reality to be a bit more logical, but every once in a while something really does make me say WTF.
It jumped out at me because I had previously noticed conspicuous anti-theft tags on jugs of Tide in a downtown CVS, for what that's worth.
Washing detergent is pretty expensive in the UK, and I can understand how people might start stealing the ultra-concentrates to pay for drugs.
This article doesn't pass the sniff test for me.
I've seen some pretty brazen theft before. A gas station down the road from me lost a large display of cigarets when two people walked in picked it up and carried it off when the cashier was dealing with a flooding toilet (most likely caused by them before a short time before).
Also if they are presumably loosing many thousands of dollars a week to the theft of something so bulky, how the hell haven't they figured out a way to prevent that sort of theft?
If it's happening, my money is on them being in on it somehow because it's really just ludicrous otherwise.
Also, many of the quotes and details given appear to be pretty tongue-in-cheek.
http://baltimore.cbslocal.com/2012/03/14/tide-detergent-beco...
and again:
http://baltimore.cbslocal.com/2012/03/23/prince-georges-coun...
Then extended as a feature in The Daily later that month:
http://www.thedaily.com/page/2012/03/12/031212-news-tide-the...
Which lead it to becoming a subject on Snopes:
http://www.snopes.com/media/notnews/tide.asp
It seems that the writer at NYMag hit his word count by extending the background on the brand, since he had a ready source available with the marketing/PR department at Procter. I think this could have been more interesting if it went into the direction of exploring the economics at work.
Interesting read about the "Economic Theory of Bike Crime": "...Using this risk-return framework for crime, it begins to be clear why there is so much bike theft. For all practical purposes, stealing a bike is risk-free crime. It turns out there is a near zero chance you will be caught stealing a bike (see here) and if you are, the consequences are minimal. "
-Warren Buffet
Since people are always going to wash clothes, retailers can guarantee they'll shift, and it's virtually un-perishable - and because the margins on tide are rather low, shops will happily buy suspect goods: they're practically untraceable and will shift fast.
Practically everyone does laundry, but not everyone drinks coffee. And those who do drink coffee will have differing tastes and far more varying brand loyalty than the detergent market.
Not only popular in the US!
EDIT: And if it's already ground when you buy it, it's no good, by the way. ;)
One is a kid can probably walk out of his parents basement with a bottle of tide and mom and dad probably won't notice quite as obviously as if the kid walked off with a $20 bill. So at least some Tide is from unemployed teens smoking up via mom's walmart bill. Obviously not terribly high volume, but...
Another is there is already a booming market in turning high value food stamp food into money for "whatever". Our food store was surrounded by bars where a cold steak presented at the bar resulted in maybe half price in cash being returned, more or less. Also you can buy a steak OTC, cooked even, from the bar, for cheaper than we sold them. Whatever drug market operating in steaks is parallel or in competition with the existing food stamp market in steaks. This also explains the anecdote WRT food stamp corruption the crooks are always buying stacks of steaks with food stamps... they're the universal currency, not doritos or rice bags or whatever. If you're trying to turn stamps into cash you buy steaks. (yes I'm old, and I'm well aware its a debit card like scheme now, but nothing really changes with the market)
I'm speechless. Can that figure be true?
I would imagine boots do not count since we're talking about detergent here, although some shoes can be thrown into the washing machine.
There are three comments about socks now :-) But to get to 68 you'd still have to buy 34 pairs of socks. Even if you exchange some of them for shirts, pants and underwear, you'd need a pretty big sock drawer if you keep adding and adding every year...
Well, unless you say that the baby isn't a "consumer", in which case your average is the same total number of items of clothing divided by a smaller number of consumers.
(Sorry ... someone had to do it)
I really like viewtext. To whoever made it, thanks!
If you're using it as a proxy for cost per volume then lately prices have exploded such that blades win, but the winners used to be pharmaceuticals, batteries, film (ye olden days), and oddly enough spices. Spices were good enough for galleons in the middle ages, so I guess its no great surprise. The price of a cardboard box full of genuine vanilla flavoring or maple syrup is fairly shocking if never considered before.
If you demand pallet level ordering / money laundering it is surely laundry detergent. Nothing else comes close in cost at the required pallet level sales volume. Certainly not $1/gallon distilled water pallets or $5 bags of road salt.
Getting cash by shoplifting has advantages over burglary, mugging, and prostitution.
People selling crack are criminals. They have some organisation and are usually involved in other crime. Once you have the network and are committing crime selling Tide is just more profit.
In a standard drug+robbery cycle (I'm guessing here):
Alice robs a Walmart/7-11/etc with armed force or intent to use armed force.
Alice gains $500.
Alice goes to Bob and pays the $500 to him for drugs.
Not only is Alice in danger (she can be prosecuted for armed theft), but the cash can be traced back to Bob putting him in danger. This also links Alice to Bob's drug dealing activities which stacks additional charges on Alice.
In a Tide-enhanced drug+robbery cycle:
Alice goes to the Walmart/7-11/Etc and walks out with 10 tubs of detergent (coordinating shift changes to make her escape). If caught, she can only be prosecuted for shoplifting which is at best a mark on the record.
Alice sells the tubs of Tide to Bob and grabs her drugs.
If caught with the tubs of Tide, Bob can deny any connection. In addition, as Cynthia, Darcy, Elizabeth, ... all shoplift Tide from the same store, that store's inventory of Tide detergent will be depleted. As it takes time for P&G to ship the Tide out, the store will have to rely on local-area suppliers of Tide which in turn will have bought the Tide from Bob at a markup.
As long as Bob is not caught with the drugs on him, he'll not face any charges (for possessing marked cash for example) as a bottle of Tide is deniable. Similarly, Alice will only face charges for shoplifting which carries a far more lenient sentence compared with grand theft.
But some folks with long-established accounts on here confirmed that they've seen evidence of the Tide underground economy in and around DC.
I think the world would be a more interesting place if it turned out that Procter and Gamble had subcontracted some PR firm who trolled the shopkeepers, police and crackheads alike.
The last half of the article detailing the "detective work" (read: harassing destitute drug addicts) made me sick.
The drug user is who acquires the Tide, and then barters it for drugs. As other have pointed out, shoplifting Tide carries less risk than burglary, armed robbery, prostitution, etc.
If anything I think this speaks to the resourcefulness of drug users, and/or, the effectiveness of black markets.