Mouthwash Millions: How Listerine Royalties Became a Lucrative Investment

Uncover the financial gains and astronomical earnings from Listerine royalties for major institutions and investors.
May 16, 2024

Who would have thought that America's favorite mouthwash brand has its royalties divided among some of the country's wealthiest people and organizations?

Despite tasting like "old shoe," according to Reader's Digest, Listerine royalty owners have gained a lot of earnings over the years. These include former American politician Chris Christie, the Diocese of Rockville Centre, and the Baird Foundation, among others.

Although most celebrity royalty owners won't reveal how much they're getting, an online report shows that they received around $6 for every 2,016 ounces of Listerine sold in 2014. For large institutions, the earnings are astronomical. The Baird Foundation reported that the book value of its royalty interest amounts to $1.5 million. All of these values have certainly gone up today.

Listerine's Royalty History

Listerine was first developed in 1879 by Dr. Joseph Lawrence in St. Louis, Missouri. Lawrence made a formula containing alcohol and essential oils, naming it Listerine in honor of prominent British surgeon and medical scientist Joseph Lister whose antiseptic surgery practices inspired him. At first, Lawrence could not find a market for his product since no one wanted a surgical antiseptic even among dentists​​​​.

In 1881, he thought of licensing the formula to small-time pharmacist Jordan Lambert. The agreement was succinct: Lambert's company would become the sole producer and distributor of Listerine, and Lawrence would receive $20 for every gross of bottles sold. This deal was later amended to account for different container sizes​​. However, by 1884, Lawrence lowered his stake in the Listerine royalty down to $6 per 144 bottles.

Listerine's market breakthrough came with the marketing genius of Gerard Lambert, Jordan Lambert's son. In the 1920s, he invented the term "halitosis" to describe bad breath, which influenced medical practitioners to view it as a widespread medical concern. Gerard's aggressive marketing tactics pulled Listerine from modest sales to a dominant mouth care brand in the United States​​​​.

But there was one problem with the contract between Lawrence and Lambert: no end date was specified for the royalty payments. That means even Lawrence's heirs would still receive their $6 cuts from the sales in perpetuity.

In 1914, when Listerine became the first over-the-counter mouthwash in the United States, its sales hit the roof. Vera Hopkins, Lawrence's granddaughter, inherited the royalties and received over $4 million over a period of 19 years.

Years after the royalties were divided among her children, the royalty trust was sold to the Catholic Archdiocese of New York,, Wellesley College, The Salvation Army, The Rockefeller Foundation, and the Baird Foundation, among others. 

The corporate ownership also changed hands from The Lambert Pharmacy Company in the 1950s to Pfizer in the 2000s (when it acquired Warner-Lambert) to Johnson & Johnson in 2008. 

Despite the public revelation of the Listerine formula in 1931, the brand's value soared. However, by 1955, Warner-Lambert (successor to Lambert's company) challenged the ongoing royalty payments. The company argued that the contract should not be perpetual since the secret formula was no longer a secret. However, the ruling became in favor of continuing the royalties as long as Listerine was sold since any cessation of production would end the royalty obligations​​​​.

Today, Listerine is owned by Kenvue (formerly Johnson & Johnson's division), maintaining a broad range of products beyond the original mouthwash. The royalties have been divided among various entities, including Lawrence's heirs, private investors, and institutions.

Listerine Royalties Sold for $63,000

Today, it is possible to own the mouthwash product's royalties when you register at Royalty Exchange. In this asset, for example, an investor paid $63,000 last April 2024, which is 24.68 times its value over the last twelve months.

From 2020 to 2023, Listerine's royalties have not gone below the $2,500 mark, making an average of $2,628.50 in earnings.

You'll notice that royalties generated in the United States are paid monthly, based on the prior months’ sales. On the other hand, royalties from sales in all other countries are paid on a quarterly basis. This is why there's a spike in payments in various months because of the quarterly foreign royalty payments.

Why Invest in This Royalty

Listerine continues to be the top mouthwash or dental rinse brand in the United States, registering more than double in sales compared to its closest competitor in 2018. In 2023, Kenvue, the makers of the product, reported a 3.6% organic growth in its Essential Health division, highlighting the value realization and strong performance of its new oral care product, Listerine Gum Therapy. This was boosted by professional endorsements from healthcare practitioners. 

North America also set the record for the largest consumer of mouthwash products in 2022, while the Asia Pacific region was the fastest-growing in terms of consumption, according to a report. These trends continue to hold strong for Listerine as it's the nation's leading mouthwash brand.

Interested in getting started with royalties investing? Check out these investor guides as well as a new share of Listerine royalties that just went up on the platform:

Royalties From Listerine Mouthwash

Introduction To The Royalty Exchange Marketplace

About The eXchange

Music Royalties 101 – Intro to Music Royalties

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