90836459 levis history

Gardner Boulmay, a student at Babson College and editor of the Babson Free Press, prepared this case with theassistance of David Wylie, Director of Case Development, under the supervision of ProfessorLarry Moss, BabsonCollege, as a basis for class discussion rather than to illustrate either effective or ineffective handling of anadministrative situation.

Copyright © by Gardner Boulmay and Babson College 1997

148-C97A

Not By Jeans Alone

The Story of Levi’s

The Beginnings of Levi Strauss

The discovery of gold at Sutter's Mill in 1848 set off a flood of immigrants to California.Before the precious metal was unearthed, there were 14,000 citizens living in the state. Withinfour years, a state census found over 223,856 new residents within its borders (Paul, p. 25). Ofthat increase, 68 percent were American and 32 percent were either from Latin America orEastern Europe.

Not By Jeans Alone 148-C97A

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One of those Eastern European immigrants was a Bavarian Jew by the name of Oscar LeviStrauss. Strauss, unlike his fellow immigrants, had already spent some time in America. He cameto New York in 1847 to join his two half-brothers' dry goods store. While selling everything fromtable clothes to sewing needles, Strauss was intoxicated with news of the California Gold Rush.He set sail for San Francisco, the self-proclaimed El Dorado of the West, in 1853.

The journey took three months and upon his arrival, Strauss met his sister Fanny andbrother-in-law David Stern. Stern had just established another dry goods store in town, andStrauss, realizing the opportunity to sell merchandise to gold-hungry fortune seekers, quicklyjoined the business as a partner. Both he and Stern worked feverishly to supply the thousands ofwould-be miners arriving every week. The store carried everything, from table linens to men'sand women's undergarments. After a few years, Strauss' business savvy was obvious and thestore grew into Levi Strauss & Company (LS&CO.), one of the largest wholesalers in SanFrancisco. Among the store's thousands of items, one product would become its most important:denim.

Denim - So Much More Than Cotton

The history of denim has become something of a legend in the fashion industry. Onceused to fashion tents and wagon covers, denim has become the most popular material in the worldfor both men's and women's pants (Exhibit 1).

The first denim was produced in the city of Nimes, France before 1700—the term denimwas derived from the French expression "serge de Nimes." At the time, denim was made fromwool and, as folklore had it, was cut to make the sails for Genovese ships. The sailors, whoappreciated the material's strength and comfort, began to make pants—now called "genes"—outof it.

Shortly after 1700, denim producers began making the fabric from cotton rather thanwool. The switch made the fabric stronger and that strength was its real commercial value. "Thehard twist of the blue threads, and the density of threads per square inch—as much as seventywarps and fifty fills per inch—imparted strength to the fabric" (Cray, p. 32-33). The result was anine ounce material—later dubbed Double X denim by LS&CO.—which, at the time, was theheaviest in the world.

Denim's strength and softness was noted by many, but except for the Genovese sailors inthe eighteenth century, no one ever considered making clothing from them. The first to do soJacob W. Davis, a tailor from Reno, Nevada.

The Inventor

Born a Russian Jew named Jacob Youphes, Davis set out for the New World in 1854 atthe age of twenty-three. After a month-long sea voyage, he arrived in San Francisco not as afortune-seeker but a businessman.

Unfortunately, all of Davis' business ventures failed rather quickly. After accumulating amountain of debt, he settled down with his wife in Reno, Nevada working as a tailor—his trade by


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apprenticeship. At the time, miners traveling around the area needed dry goods so Davis beganmaking tents, wagon covers, and blankets using an off-white, denim-like cloth he ordered fromLS&CO. The cloth, called duck at the time, was the same as denim except for its off-white color.

The Invention Is Born

In December 1870, the wife of a lumberjack came to Davis requesting a special pair ofpants. The pants, she said, needed to be rugged enough to stand up to the harsh conditions herhusband—and every other workingman in the West—encountered. He agreed noting that manyworkingmen claimed their pants did not wear well; "[t]eamsters, surveyors, miners and longcomplained that their garments cam apart, especially where the pockets were sewn to the pants"(Cray, p. 18). So, Davis decided to fashion the pants using the duck material he purchased fromLS&CO.

After the pants were sewn together, Davis began to wonder how he could prevent themfrom tearing at the pockets. "[T]he thought struck me to fasten the pockets with…rivets," hesaid. He promptly sold the pants but "did not make a big thing of it" (Cray, p. 18-19).

The pants worked extremely well—thanks to the rivets and material—and, on word ofmouth alone, Davis was asked to make four more in January, ten more in February, and twelvemore in March. During this period, he changed over to LS&CO.'s Double X blue denim becauseit was slightly more comfortable. Within eighteen months, he had sold over two hundred pairs ofthe pants and his line of credit with Levi Strauss & Co. had grown to $350 (Cray, p. 20).

Patenting the Success

Once Davis realized the simple act of placing copper rivets in the pockets made the pantsperfect for workingmen, he knew they needed patent protection. At the time, however, he did nothave the $68 patent fee to file the application. Rather than abandon the idea, Davis searched for aventure capitalist willing to put up the money.

On July 2, 1872, Davis drafted a letter to Levi Strauss, someone he believed might beinterested in the riveted pants. In the letter, Davis spelled out a proposal for a patent applicationand garment distribution partnership between himself and LS&CO. The following is an excerptfrom the letter:

"The secratt of them Pents is the Rivits that I put in those Pockets and I found thedemand so large that I cannot make up fast enough. I charge for the Duck $3.00and the Blue $2.50 a pear. My nabors are getting yealouse of these success andunless I secure it by Patent Papers it will soon become a general thing. Everybodywill make them up and thare will be no more money in it.

"Tharefore Gentleman, I wish to make you a Proposition that you should take outthe Latters Patent in my name as I am the inventor of it, the expense of it will beabout $68, all complit and for these $68 I will give you half the right to sell all suchclothing Rivited according to the Patent, for all the Pacific States and Teroterious,the balince of the United States and half of the Pacific Coast I resarve for myself."


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After receiving the letter, Strauss inquired what his wholesaling operation's margins wereon workingmen's clothes. Ordinarily, his company would charge $9 or $10 per dozen whileDavis—working out of his home—could get $36 just by adding a few rivets to the pants (Cray, p.21). Obviously, Strauss realized, the deal would be a winner since his company could recoup the$68 fee with just a few dozen sales. With that in mind, he and Davis signed a contract effectivelybinding entrepreneur and inventor. By August 8, 1872, Strauss' attorneys had drafted the patentpapers and sent them to Washington.

Federal examiners initially rejected the proposal because it infringed on existing patentsthat used rivets in Civil War combat boot construction. Finally, however, on May 20, 1873, afterten months and three amendments to the initial proposal, examiners granted patent number139,121 to "Jacob W. Davis, of Reno, Nevada, Assignor to himself and Levi Strauss & Company,of San Francisco, California" for an "[i]mprovement in fastening pocket-openings" (Exhibit 2).The patent hinged on the use of rivets in clothing—a real innovation in garment design—and itgave LS&CO. the protection it needed to launch one of the most successful commercializationplans in business history: the Levi's 501.

Demand Was Never an Issue

Appropriating the value generated by the invention to LS&CO. was not difficult becausethe company combined its two distinct capabilities, innovation—inventing the riveted clothing—and reputation—the Levi's brand name (Kay, p. 101). As Harry Cobrin pointed out in his bookThe Men's Clothing Industry (1970), "Strauss' success was immediate, and 'Levi's' became thenational name for his cut of pants" (p. 41).

But Levi's were not just successful with miners, they became an icon for American culture;they "became as popular in the West as the lasso and Colt revolver" (Feldman, p. 64). This long-term popularity occurred because the company continued to manage its distinct capability ofreputation; By doing so, LS&CO. was able to achieve a sustainable competitive advantage in theriveted clothing industry even after its patent had expired.

The commercialization of Levi's could be divided into three phases. During the firstphase, from 1870 until 1890, the company establishing its brand name by protecting its patentrights and standardizing its manufacturing inputs. From 1890—the last year of patent protectionfor Davis and Strauss—until the early 1950's, LS&CO. defined its brand name. The third phaselasted from the mid-1950's through the late-1970's during which time the company adjusted itsbrand name better to reflect changing social values. Only with all three phases could the oncesmall San Francisco dry goods store of LS&CO. sell two-and-a-half billion pairs of jeansbecoming the largest clothing manufacturer in the world.

Establishing the Brand - 1870 to 1890

Before 1873, riveted pants were not associated with any particular brand name as Davisonly sold traveling laborers and, on two occasions, store owners. Although word spread quicklythat Davis' invention was a marvelous improvement on current workman's pants, he made noeffort to solicit any orders for fear of replication. For instance, immediately after he wrote Strauss


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proposing a business venture and joint patent application, he added the words "patent applied for"to his label to scare away would-be imitators (Cray, p. 22).

After Davis received his patent and assigned it to himself and LS&CO., Strauss began inearnest to establish a reputable brand name. First, he asked Davis to close down his small, one-man production facility in Reno and moved to San Francisco to oversee the company's productionsystem in April 1873. Next, after seeing preliminary sales boom, Strauss built a smallmanufacturing plant within his wholesaling store on 14-16 Battery Street (Exhibit 3). Withinseven months, LS&CO. had produced over 21,000 pairs of jeans for $43,510 in revenue.

Noticing the success of LS&CO., competitors began copying the riveted pants. InSeptember 1873, A.B. Elfelt "began producing similar riveted clothing," and Kan Lun "startedmaking riveted pants in a San Jose loft." LS&CO. responded quickly with lawsuits against bothproducers claiming its patent was infringed upon. The company won both cases and Elfelt andLun were forced to close down (Cray, p. 24). Other cases of unlawful replication continued butthe company aggressively protected its patent rights with successful lawsuits. With the infringingmanufacturers forced to stop their manufacturing, LS&CO. was one step away from establishing abrand name.

Before trying to increase brand awareness through trademarks and patents, Strauss knewhis jeans needed to be more consistent in terms of quality and style. He therefore centralized hismanufacturing plants, hired only well-trained female seamstresses, and standardized his rawmaterial inputs. Ensuring all of the materials used to make the jeans were of the highest qualitywas an integral part of Strauss' plan. One of the steps taken to ensure this consistency occurred inDecember 1875 when Strauss purchased the Mission and Pacific Woolen Mills. The mills werethe largest producers fabrics in the West at the time and eventually became the sole supplier of thelining used in the jeans. This move gave him the control he needed to ensure that a consistentflow of quality fabrics went into his manufacturing process.

LS&CO. also established a long-term relationship with the New England mill ofAmoskeag to assure a consistent supply of denim. This move allowed the shade of blue used tobe standardized throughout the company's products (Kay, p. 31).

The copper rivets used to strengthen the jeans and the yellow-orange thread used to sewthe denim together (Downer, p. 128) also contributed to standardizing the product. Each rivetcarried the letters "LS&CO. S.F." and was quickly trademarked, while the thread became astandard throughout the blue jeans industry.

Once Strauss was sure that no one could use his invention by infringing on his patent andthat his manufacturing system produced a uniform, high-quality product using skilled labor, hebegan to establish the brand name Levi's. He first assigned a lot number to each of the rivetedproducts his company sold. 501 was assigned to "the top-of-the-line, linen sewn, cooper-riveted,nine ounce denim waist [jeans]" (Downey, p. 117). That lot number designation has stayed withthe brand ever since (Cray, p. 37). Like the rivets used in production, LS&CO. also received atrademark for the 501 number.


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In 1875, LS&CO. began to use a "distinctive double arc of stitching" on the pockets of itsjeans to differentiate them from other workingman's pants (Downey, p.141). The stitch has beenone of the company's most famous and widely recognizable trademarks. As such, LS&CO.requested and received the oldest clothing trademark still in existence today (Downey, p. 143).

Next, Strauss needed a way—in trademark form—to convey to consumers the legendarystrength of his jeans. In 1886, someone suggested the company affix a leather patch to the rear ofthe pants that carried the now famous "Two Horse Brand" drawing (Exhibits 4 and 5). Thepatch would forever identify the jeans as Levi's and associate them with strength and durabilityjust as Strauss had intended. Again, to ensure protection from imitators, LS&CO. trademarkedthe patch and drawing.

Throughout the first phase of Levi's commercialization, LS&CO. had been expanding itsproduct line to include denim jackets, blouses, vests, coats, and jumpers. The expansion tookplace as consumers began to recognize the Levi's brand name as an established manufacturer ofriveted denim garments. For example, in 1874 the company saw 70,500 pairs of jeans, vests,coats, jumpers, and blouses produced for $148,471. During the following two years, sales figuresjumped 14 percent per year (Cray, p. 25). By 1878, over 100,000 garments were being sold andby 1880, LS&CO. had $2.4 million in sales revenue from its riveted denim products. Clearly,consumers were enjoying LS&CO.'s newly established brand name.

Defining the Brand - 1890 to 1950

Exactly seventeen years after being issued, the patent giving LS&CO. the exclusive rightsto riveted denim clothing expired and became public domain. Immediately, manufacturer aftermanufacturer began producing riveted jeans and other clothing. Having relied on consistentproduct quality and word-of-mouth among miners, farmer, and lumberjacks to promote its jeans,LS&CO. now had to promote actively the brand to consumers.

The first advertisements ever placed by LS&CO. were targeted towards "working men ingeneral." Since Strauss was a workingman for many years and knew the particular hardships theyfaced, he wanted to show his appreciation and respect for the hard-working men of the West. Healso knew that this group of consumers needed the durability of the jeans.

"These goods are specially adapted for the use of FARMERS,MECHANICS,MINERS, AND WORKING MEN in general. They aremanufactured of the Best Material, and in a Superior Manner. A trial willconvince everybody of this fact. USE NO OTHER, AND INQUIRE FOR THESEGOOD ONLY;"

"For Men Who Toil;"

"CUT FULL, HONOSTLY MADE;"

"They're made out West to lead the best and suit their wearers well;"


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(See Exhibits 6 and 7 for examples of visual advertisements.)

Slogans like the ones below perpetuated this image of Levi's as a quality brand of durablepants.

"It's No Use, They Can't Be Ripped;"

"WITH STRENGTH AND EASE, THEY ALWAYS PLEASE;"

"Two Horse Overalls are sold to men of every trade, are guaranteed to be the bestof any others made, there's honost worth and longest wear in every pair we sell;"

These advertisements directly associated words like "quality, strength, and ruggedness"with Levi's. In addition, the trademarked "Two Horse Brand" logo continued to perpetuate theimage of quality construction and indestructible material.

Up to that point, Levi's were exclusively sold in the western states and territories of theUnited States. It was no surprise since the brand had been defined as the pants of the westernworkingman. However, after a devastating earthquake hit San Francisco in 1906, LS&CO. wasgiven the opportunity to build a much larger manufacturing facility with the capability ofproducing enough riveted clothing to supply the entire nation. The company took it with the ideaof seeing how far the newly defined brand name could sell.

To start the expansion, LS&CO. contributed heavily to a 1915 San Francisco expositioncelebrating the "city's phoenix-like rise from the devastation of the 1906 earthquake" (Downey, p.225). There, retailers, producers, and buyers from around the world watched in amazement as thecompany's manufacturing plant was opened to the public. To promote sales, advertisers created"cunning brochures for visitors…[which,] folded up, resembl[ing] a tiny pair of [jeans]"(Downey, p. 227). Further, the company unified its marketing efforts to promote its products'quality and durability through associations with cowboys and the western genre. The result ofthis production and marketing blitz—based on the more clearly defined Levi's brand name—was atremendous surge in sales from 1916 to the late 1920's, when figures averaged $4 million peryear.

Although LS&CO. had clearly defined its brand name by saying who its customers wereand why they liked its jeans—because of their strength and quality construction—the companystill was not finished stressing its most valuable reputational attribute: quality construction. To doso, a series of trademarked "EVERY PAIR GUARANTEED" tags were placed on each pair ofLevi's made starting in the 1940's. The tag proudly proclaimed: "This is a pair of Levi's, They arethe original jeans, Every pair satisfaction guaranteed." To this day, the tag still remindsconsumers of the company's undying belief in quality.

With the company's consistent references to Levi's quality construction, ruggedness,strength, and durability—combined with overtones of the western work ethic embodied in thecowboy—the stage was set for the brand to become the symbol of a social revolution.


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Adjusting the Brand - 1950 to 1980

If the past eighty years had seemed turbulent for LS&CO. with its founding, growth,devastation, and rebirth, the next thirty would seem violent. Between a generation fighting withits parents over rock and roll and a nation being torn apart by the Vietnam War, Americansociety—as well as the world—was being restructured in radical ways. Social movementsbecame a matter of life and death at times, and political statements were made with everything;from clothing to hairstyles, the simplest things began to carry tremendous value. One of the mostprominent features of this changing landscape was Levi's jeans.

James Byron Dean, at age twenty-three, was an average actor in 1952 and an Americanlegend just three years later. In two of the most successful movies of the decade, Dean starred inEast of Eden and Rebel without a Cause. His character in both movies "seemed to embody theyearning and fears of American teen-agers. [He] seemed to articulate the frustration of youthfuldreams by an adult world that measured success in terms of affluence" (Cray, p. 124-125). Notsurprisingly, he did it all wearing Levi's 501 jeans. Following his death in a tragic highwayaccident in 1955, the young star became an immediate legend. Posters, magazines, andnewspapers all carried photos of him…and his Levi's.

At the same time Dean was becoming a success, Marlon Brando burst into the spotlightplaying a similar, rebellious character. In 1954, Brando starred in The Wild Ones. The movie wasa success, and together Dean and Brando shaped an extremely attractive Levi's image forAmerica's youth to grab hold of.

This new, "anti-establishment" brand definition settled rather quickly on the company'sriveted jeans (Cray, p. 126). It is important to note, however, that unlike what happened tenyears later, this adjustment in the Levi's brand name was not provoked nor appreciated by thecompany. One LS&CO. executive said, "in the middle 1950's we [LS&CO.] got this flak…theAmerican Institute of Men's and Boy's Wear…started going after blue jeans" (Cray, p. 126).

This shift in the brand's image was good for business though. Sales increased to $34million a year by 1956 and the San Francisco company (Cray, 130). Still, jeans were considered"bargain-basement" garments which, although comfortable and durable, were still unfashionable.It would not be until the mid-1960s that they became a fashionable way to make a politicalstatement.

The event which sparked Levi's final brand image-shift from a rough, cheap pair of pantsto a fashionable item of clothing occurred in October of 1964 at the University of California atBerkley. Jack Weinberg was arrested for soliciting funds for racial equality. Once whisked awayto a police car, other students joined in pursuit and began a demonstration to prevent the arrest(Cray, p. 149). Socially, what the students demanded was a sense of individualism and personalfreedom. Levi's, long a symbol of the individualism, strength, and ruggedness of the West asestablished by LS&CO., became their uniform.

Another large wave of social unrest was sparked on college campuses by America'sinvolvement in the Vietnam War. The issue did not just divide the United States, it came todivide many other Western countries. Students in Mexico, Holland, Sweden, and France all


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joined in similar protests, and there, like here, their symbol of solidarity was a pair of Levi's (Cray,p. 149).

Like the first brand image adjustment in the 1950's, sales throughout the 1960'sskyrocketed. In 1963, sales were $54 million; three years later, that figure had tripled to $152million. However, contrary to the previous brand image shift, LS&CO. now latched onto andactively associated itself with it. For instance, the company began pumping thousands of dollarsinto radio advertising on popular college stations in an attempt to ensure cement its hold on jeanspurchases. Further, LS&CO.'s Marketing Director hired famous 1960's bands such as JeffersonAirplane and Sopwith Camel to perform under the Levi's label. Finally, in 1966, Levi's launchedits first ever television commercials targeting the energy of the youth during the period (Cray, p.150).

This intentional corporate change in marketing strategy was critical in terms of bringingLevi's into the fashion landscape. "Prior to that time, advertising was very straightforward,stressing utilitarian themes. Robinson [the Marketing Director for LS&CO. at the time]…linkedthe company to the fun and excitement of the period" (Cray, p. 150). The result was two hundredmillion pairs of Levi's sold in 1967 (Schlager, p. 74).

Since the final shift in the brand's image, LS&CO. has sold over one billion pairs of Levi's.Today, they are considered a versatile, rugged, and comfortable pair of pants which can—andshould—be worn by nearly everyone. The reason the brand is so appealing to consumers today isbecause Levi's have bee associated with a large number of American genres, everything from hardworking miners, to social revolutionaries. Yet, the name Levi's has always been associated withone product attribute: quality. People know the pants only get more comfortable with age andcan be worn forever. "You can wear them until they disintegrate," said a one time salesman of thebrand (Boulmay, interview).

Discussing the social impact of Levi's on American culture, Richard Martin, the Curator ofThe Costume Institute at The Metropolitan Museum of Art said:

"…Levi's jeans are more than the politics and sociology which have caused theirextraordinary popularity. They embody the irreconcilable riddle of the modernworld. They are both wonderfully ordinary and wondrously extraordinary; theyare common and they are original and exceptional. They declare a body politic andthey express one's individuality. Levi's jeans are the most satisfying andmeaningful clothes of our time."

Whether a symbol of our nation's birth, a testament to the hard work which made it great,or the political ideals expressed in our heritage, Levi's mean so much to so many. The worldaround, the word Levi's means America. The financial success of LS&CO. would have beenimpossible if the company had not pursued its three distinct phases of commercialization—establishing, defining, and adjusting the brand—to match the market’s ever changing demands.


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Exhibit 1


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Exhibit 2


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Exhibit 3


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Exhibit 4


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Exhibit 5


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Exhibit 6


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Exhibit 7


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BibliographyBoulmay, Grant. Personal Interview. 22 March 1997.

Cobrin, Harry. The Men's Clothing Industry: Colonial Through Modern Times. New York:Fairchild Publications, 1970.

Cray, Ed. Levi's. Boston: Houghton Mifflin Company, 1978.

Downey, Lynn. This Is a Pair of Levi's Jeans…The Official History of the Levi's Brand. SanFrancisco: Levi Strauss & Co. Publishing, 1995.

Feldman, Egal. Fit For Men: A Study of New York's Clothing Trade. Washington D.C.: PublicAffairs Press, 1960.

Knopf, Alfred. The Shirley Letters. New York: Borzor, 1949.

Paul, Rodman. California Gold: The Beginning of Mining in the Far West. Cambridge: HarvardUniversity Press, 1947.

Schlager, Neil. How Products Are Made: Volume I. Detroit: Gale Research, 1994.

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