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Retailers Couldn’t Stock Hand Sanitizer Fast Enough. Now They Can’t Give It Away.

Once nearly impossible to find, bottles of sanitizer are now taking up shelf space and stores are trying promotions to get rid of them; ‘It’s worth more to us gone’

By Jaewon Kang
May 20, 2021 11:00 am ET

Keith Milligan is trying to get sanitizer off his hands.

Mr. Milligan, controller of Piggly Wiggly stores in Alabama and Georgia, is offering 4-for-1 specials on sanitizers after sales nearly halted earlier this year. He tried selling the disinfectants for half-price and discounted them at 75% to no avail.

“Nearly every family has two to three bottles of it,” he said. He plans to give them away to shoppers at checkout stations if the latest promotion doesn’t make a dent in his supply.

Supermarkets are on a mission to get rid of hand sanitizers. Once nearly impossible to find, America is awash in it.

Consumers rushed to buy sanitizers when the pandemic took hold, eager to clean their hands and help protect themselves from the new coronavirus. The surging demand resulted in shortages and purchase limits at retailers across the country. Hoping to fill their shelves, supermarkets bought inventory from overseas and turned to other businesses—including distilleries—that switched their production to make sanitizers for the first time. Manufacturers expanded capacity, at times overpaying for components like pumps.

“We, at one point, cold-called 60 distilleries to see if they would make sanitizers for us,” said Chris Testa, president of distributor United Natural Foods Inc.

Now, supermarkets are sitting on pallets of them. Covid-19 cases are declining as more people get vaccinated. Health officials have said in recent months that the virus is airborne and that the disinfectants aren’t as effective as masks and distancing. Sales of hand sanitizers are down 80% to $9.2 million for the week ended May 8 from the year prior, according to NielsenIQ. Weekly sales hit as high as $52 million in July. Average unit prices are $2.10, about 40% lower than a year ago.

Sanitizers, which use alcohol to neutralize viruses and other pathogens, typically expire in two years. Retailers are seeking to move through their inventory before that deadline and free up space on their shelves and in warehouses for other products in higher demand.

Discount chain Ocean State Job Lot, in Rhode Island, has been offering $10 gift cards for people who buy $10 worth of sanitizers. When the sanitizers aren’t on what the company calls “Crazy Deals,” they are still 50% off. The company also has specials on sanitizing wipes.

“First, there’s not enough. Next, it’s the right amount. And now, it’s too many,” said CEO Marc Perlman. He said since last March, the chain sold between $10 million and $15 million of sanitizers. Now it is selling them at heavy discounts.

“It’s worth more to us gone than it is clogging our shelves,” said Mark Griffin, president of B&R Stores Inc. in Nebraska. It is now selling sanitizers for as much as 60% off at displays at the end of some store aisles. Last year, he said he paid double for sanitizer compared with 2019.

A Lucky Supermarket in Millbrae, Calif., is offering free bottles of hand sanitizer with any $10 purchase at the store. The company declined to comment.

Gus Lebiak, president of distributor Krasdale Foods Inc., said his company has sanitizers worth hundreds of thousands of dollars in its distribution facilities. He said he is thinking about giving away sanitizers to summer camps and food banks in New York rather than run big promotions because that can drop demand even further.

The oversupply is a bonanza for some consumers. In Chicago, Leili Mashhadi bought 70 pocket-size sanitizers on sale for 7 cents in January. A self-proclaimed germaphobe, Ms. Mashhadi said the sale was one of the greatest bargains she has seen. She has about 15 left after handing them out to family and friends.

“I was like Santa Claus, but for sanitizers,” Ms. Mashhadi said.

Nicholas Keiffer, a software engineer in Baton Rouge, La., has stopped using what he says are low-quality sanitizers in public places such as gyms and restaurants. He washes his hands instead.

“Ever since my hands started smelling like tequila, I was like ‘Nope,’ ” he said. He said he has used up sanitizers he bought from nearby drugstores and supermarkets last year and hasn’t purchased more.

Some retailers are turning to online auction websites to get rid of their surplus sanitizer. JD Daunt, chief commercial officer of Liquidity Services Inc., said Target Corp. , Staples Inc. and independent operators are using its Liquidation.com marketplace to sell boxes and pallets of excess inventory. Prices have fallen to 2 to 3 cents on the dollar, a 90% decline in resale prices over six months, he said.

Target declined to comment. Staples didn’t comment on liquidation efforts, but said it has donated hand sanitizer to schools.

Some remain bullish on sanitizer. The company behind Purell hand sanitizer, Gojo Industries Inc., is betting that demand for its products will outlast the pandemic, adding three facilities over the past year. Company spokeswoman Samantha Williams said the demand for sanitizers is declining from peak levels but is still higher than pre-pandemic levels. The company sees increased awareness in hygiene practices, she said.

Among those struggling with the current glut: distilleries that jumped into the sanitizer business when brands couldn’t keep up with demand last year.

Jordan Karp, co-founder of Adirondack Distilling, which makes whiskey, vodka and gin, still has between 10,000 and 20,000 sanitizers that the company made in stock. He said he resold some caps and bottles back to manufacturers and submitted bids to sell extra sanitizers to the state of New York.

In Oregon, Crater Lake Spirits is giving away leftover sanitizers after it produced roughly 60,000 gallons of disinfectants for hospitals and hotels last summer, said Alan Dietrich, president of the distillery’s owner Bendistillery Inc. The distillery expects to lose about $200,000 after using excess capacity to make sanitizers.

“We viewed it as a wartime pivot, like Ford making tanks instead of making cars,” he said.

Jeff Kozak, chief executive of Vermont-based WhistlePig Whiskey, who had partnered with a soap company to make and donate sanitizers, said distributors recently asked if his business wanted to buy extra sanitizers and turn them into whiskey.
Mr. Kozak said: “I can’t believe we’re now back at the full circle.”

Write to Jaewon Kang at jaewon.kang@wsj.com

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