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Levi Strauss & Co. Largest Buyer of Cotton in the World

A few years ago, Levi Strauss & Co., at the time the largest buyer of cotton in the world, had quietly started sourcing 2 percent of its annual cotton buy organically. The company didn't announce the initiative or have plans to launch a line of organic-cotton clothing. (They been there, don that: In 1991, it had launched a line called Levi Natural that didn't do so well. Levi's marketers pulled the plug, lest they lose their shirts). Rather, the company planned to blend the organic cotton with conventional cotton, much the way paper companies blend recycled pulp with virgin pulp to make a partially recycled paper product. The hope was, over time, to gradually increase the percentage of organic cotton.
Why bother? Levi's has a long history of social responsibility. (It in our jeans, is the unofficial, tongue-in-cheek company motto). It has on numerous occasions gone well beyond societal demands in such areas as community engagement, human rights, and philanthropy. In this instance, Levi's wanted to help expand the burgeoning market for organically grown cotton and, along the way, to garner experience in sourcing and working with this material that could help it gain competitive advantage as organic cotton became more widely understood and demanded by consumers.
At the time, no major apparel company had publicly moved toward organic cotton. Only Patagonia, the relatively small but bold marketer of specialty outdoor wear, had embraced organic cotton. When I learned about Levi organic cotton commitment, I figured that it was a good story for the newsletter I wrote at the time, so I called the company to learn more. The company declined to talk about it on the record. Indeed, the company had not issued any press releases about its move to organic cotton and was not identifying the organic material on product labels.

I persevered, working through contacts there, and eventually prevailed. Clarence Grebey, Levi director of global communications at the time, reluctantly agreed to be interviewed on the record.

Of course, one of the first things I asked him was, Why don't you want to talk about this? This seems like a big deal. The worlds largest cotton buyer is going organic.

Look at it from our perspective, Grebey replied. If we start promoting this, well need to explain why that fully a fourth of all pesticides in the world are used on cotton, and the resulting impacts on ground water runoff, worker health and safety, and the birds and the trees. If we do that, we risk our customers saying, So, 98 percent of what you buy is bad for people and the planet?
Grebey didn't need to go on. I knew the story line from there. Activists might demand to know, why only 2 percent? Why not 5 percent? Hey, well be conducting campus boycotts of Levi products until you commit to 10 percent organic cotton! At the time, given the vagaries of the organic cotton market, Levi's didn't know whether it could sustain even 2 percent from year to year. One modest drought or insect infestation, and the supply or organic cotton could shrink faster than a pair of 501's in hot water. Thus Levi's reluctance to tout its organic cotton initiative was understandable, even though it was passing up an opportunity to garner some green cred.
Levi's knew what it was doing. Brand leaders in particular need to be careful because activists love to make an example of them. Think about the targets of the biggest environmental activism campaigns of the past 15 years: Dell, Home Depot, McDonalds, Nike, Staples, Starbucks, and Wal-Mart brand leaders all. (It's no coincidence that, to their credit, all these companies eventually became environmental leaders in their respective sectors, even if they were initially dragged kicking and screaming to the party). The activist community has a great knack for turning a well-liked brand into a poster child for evil, and the news media and blogosphere are only all too happy to go along for the ride.

Taken from Makower, Strategies for the Green Economy.
Questions:
1. Do you think 2 percent organic cotton, under the circumstances, was a little or a lot? Why?
2. What could Levi's do to create a robust, profitably market for organic cotton? Should it be Levi Strauss' responsibility to create that market?
3. What do you think was Levi Strauss' motive for venturing into the organic cotton market? What possible motives would appeal to their stockholders? Their employees? Their customers?

Solution Preview

1. Under the circumstances, two percent organic cotton is the right amount to reintroduce a product into the market that formerly did not do well. The 100 percent natural cotton products were introduced at a time when all natural products were not yet a big hit with consumers and demand was low. A corporation that takes social responsibility without drawing attention to its efforts is wise. Examples of the negative attention that many firms have drawn, due to policies on social responsibility that some critics believe are not enough, create an environment in which Levis should use caution. Diversification into an existing ...

Solution Summary

The solution discusses questions regarding Levi Strauss & Co. the largest buyer of cotton in the world.

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