Cotton Incorporated Business Information, Profile, and History

Company Perspectives:

From agricultural, fiber and textile research, market information and technical services, to the FABRIC OF OUR LIVES television advertising campaign, fashion forecasts and retail promotions, we keep one goal in mind: To ensure that cotton remains the first choice among consumers in apparel and home products.

History of Cotton Incorporated

Cotton, Incorporated is a marketing and research company funded by over 30,000 producers and importers of upland cotton and cotton products in the United States. Cotton Inc. holds a 60 percent market share of the U.S. retail fiber market and is the world's best-selling fiber. The company is overseen by the U.S. Department of Agriculture and maintains offices in Mexico and the Far East.

History of Cotton Growers

In Postbellum America, making a living as a cotton farmer became more difficult than ever. The end of the Civil War, and consequently, the end of free labor in slaves, meant the cost of farming cotton rose. In the late 1800s and early 1900s, a series of natural disasters conspired to further challenge farmers. First, there was the infection of boll weevils, and then the flooding of the Mississippi River in 1927, and in the early 1930s, there was a drought. As disasters wiped out much of the U.S. cotton crop, cotton prices remained stable in the 1920s and dropped in the 1930s. Between 1924-29, cotton brought in an average of $1.5 billion per year; in 1932, the figure was $465 million.

When Franklin D. Roosevelt took over the presidency of the United States in March 1933, his focus was to relieve and help the citizens through the worsening Depression. One of the acts signed by the president as part of his "first New Deal," was the Agricultural Adjustment Act. The goal of the Act was to match supply and demand, which in turn was to stabilize prices and create a livable income for farmers. Cotton farmers were paid to not grow cotton, or to reduce the amount of cotton grown, until the surplus was eliminated from the market. Although the Act was later found to be unconstitutional, it was important in that for the first time, it organized cotton farmers to work together for their common benefit. Though the Act was considered successful in raising farm family incomes, in 1935 cotton farmers were still earning 40 percent less than they had in 1925.

Due to some failures of government programs and the record output of cotton in 1937, farmers took action and formed their own industry organization. Those who created the first industry organization recognized that production was only half of the problem; cotton farmers had to find a way to influence demand for their product.

Early Organization for Cotton Interests

The formation of the National Cotton Council (NCC) in 1938 brought new hope to the diverse people who farmed cotton throughout the United States. The NCC was designed to speak on behalf of all cotton interests: producers, ginners, warehousemen, merchants, and cottonseed crushers, with the stated goal of "increase(ing) the consumption of cotton and products thereof." In order to protect each disparate interest, each interest had veto power and any resolution had to be passed by a two-thirds vote from each interest. The NCC would be the first stand-alone commodity-specific organization. It was fortunate for the commodity that it chose to stand together as one; as a global economy began to emerge and synthetic fabrics were discovered, cotton would be challenged even more than before.

By the 1950s, the U.S. cotton growers' supremacy was over. U.S. cotton farmers were producing the same as they had in 1920, yet foreign growers were producing 3.5 times as much in the 1950s as they had in 1920. During the same time period, production on man-made and synthetic fibers rose from 32,000 to 5.5 million bale-equivalents. The rise in synthetic fiber production was part of the reason that cotton's share of apparel sales dropped from an 88 percent share in 1920 to a 66 percent share in 1957. Another factor was that people were spending less on clothing; Americans reportedly spent nine percent of disposable income on clothing in the 1930s, and in 1956 that figure was little more than six percent.

Problems arose in the NCC, mainly due to the disparate interests of the five main groups. Millers, for example, did not have the same interests as growers. Millers could make clothing and other products from synthetic fibers as well as cotton; in many cases, it was easier and cheaper for millers to use synthetics. As a result, in 1960, a subsidiary of NCC was formed: the Cotton Producers Institute of the National Cotton Council (CPI). Funded by a levy of $1.00 per bale on producers, the CPI worked exclusively on the interests of cotton growers, mainly through research and promotion. Through the next decade, CPI worked tirelessly but with less money than the competition, and the same problem persisted: lack of marketing savvy to increase consumer demand. CPI next decided to break with NCC and installed J. Dukes Wooters, a marketing vice-president for Reader's Digest, as head of the organization. One of the first acts of the newly independent CPI was to move the operations from Memphis to New York City, with research and development settled in Raleigh, North Carolina.

Cotton Incorporated is Formed

After the formal break, CPI decided it was time for a new name to go along with the new image. The name Cotton Incorporated was first used in 1971. The first job of the new Cotton Inc. was to convince producers they should service the needs of customers; in this case, customers did not just mean buyers of finished cotton apparel and products but also millers and manufactures. Part of the early marketing strategy was to convince manufacturers to produce garments with a blend of fibers. Instead of shirts made from synthetic fibers, Cotton Inc. convinced manufactures to make blended garments, such as 65/35 cotton/polyester blends. Cotton also began focusing on fashion and market research.

The emphases on sales, fashion, and research made the market for cotton edge upwards, and Wooters decided to update cotton's image with a clean, modern logo. Commissioned in 1973, the logo featured "cotton" in lower-case letters and a white cotton ball growing out of the double 't's. With Wooters' ingredients in place, the share of cotton rose from 33 percent in 1973 to 36 percent in 1976.

By the time Cotton Inc. was up and running, the generation that fought the war had adapted to synthetic fibers and cherished them as easy to wear, easy to care products. Wooters thus decided to focus on their children, the so-called baby-boomers. Children and teens in the late 1960s and early 1970s had rebelled in many ways, one of which was in their taste for clothing. Among the more popular fashion trends were t-shirts and jeans, both strong cotton markets. The trick was not only to market to a baby-boom generation that preferred cotton products, but to continue to sell them on the fiber as they grew older.

The trouble with marketing cotton to the end-user, the wearer of apparel, was that a lot of money and energy would have to be invested before a payoff was realized. Cotton Inc. poured money into television advertisements, hoping to create a demand from consumers of manufacturers. While spending began in 1971, it was not until 1980 that the demand for cotton was truly felt. During this time, the boomers and the actors in the Cotton Inc. commercials aged together, and Cotton Inc. played on the boomers' feeling that natural and simpler was better. The patience paid off as the demand continued into the 21st century.

The high point in marketing for Cotton Inc. came with the "Fabric of Our Lives" campaign, which began in 1989. The tag line was used into the 21st century as a tie-in for different Cotton Inc. commercials.

In addition to end-users, Cotton Inc. also had to create demand from mills and manufacturers of apparel and other cotton products. Synthetic and man-made fibers held distinct advantages over natural fibers, including cotton. Supply of synthetic fibers could be constant; there was no crop to wait on. Synthetic fibers could also be customized to different mills' specifications, and synthetics were uniform in strength, length, and color.

In order to compete with the advantages of synthetics, Cotton Inc. invested money in research and development. The first job was to set a standard for cotton quality. Although cotton had always been judged by certain standards, these were highly subjective and varied. In the mid-1950s a process began--a long one--for trying to bring uniformity and objectivity to determining the quality of cotton. The development of high-volume instrumentation (HVI) began in 1965, initiating high-speed testing to the process. Through the years, this quality determination system evolved into an industry standard for testing length and strength. HIV systems were installed in mills as early as 1969, and the systems slowly began taking their place in mills and classing offices. As late as the 1970s, cotton was largely inspected and classified by hand; by 1991 the whole U.S. cotton crop was classified by HVI.

This revolution pulled cotton closer to its competitors as far as mills were concerned. Now they had cotton they could buy based on objective criteria. The next step was to produce cotton with uniformity that mimicked the uniformity of synthetics. Research produced software, called the Engineered Fiber Selection (EFS) system, that could analyze data derived from HVI. This gave mills information quickly and efficiently about every bale of cotton they processed. Cotton Inc. began and continued to serve as host at the Engineered Fiber Selection (EFS) conference annually, which showcased the previous year's research and development, as well as new cotton fiber management systems.

The Future for Cotton

In 1996, Hurricane Fran inflicted damage along the east coast of the United States. Assessing damage at its own research facility at some $750,000, Cotton Inc. decided to build a new facility, combining two facilities into one, and having research and development and corporate functions under one roof. The new facility, located in Cary, North Carolina, was a 125,000-square-foot site, with a cost of $17 million. Although much was combined, the promotion, marketing, and fashion staffs remained in New York City.

The fiber industry overall suffered some declines in 2000 and looked forward to a better year in 2001. Although cotton was not as badly affected as markets for some synthetic fibers, it did suffer from low cotton futures and large supplies. Still, cotton continued to hold a 60 percent market share, and Cotton Inc. representatives felt that whatever synthetic fibers were developed, cotton could compete. Cotton Inc. was determined to keep reminding the public that cotton was a better fiber and developing functional finishes to cotton, such as water repellency, UV resistance, flame resistance, and other consumer-friendly finishes. By 2000, cotton held the top spot of the home fabrics market, with a 64.5 share, an increase of 1.3 percent from 1999, and up 3.9 percent since 1997. In individual categories, cotton's share of sheet set sales went from 63.3 to 70.8 percent from 1997 to 2000; mattress covers from 37.3 to 44.8 percent; and sheets from 66.2 to 67.8 percent. The market share for towels stayed at 96 percent from 1997 to 2000.

During this time, a portion of the Cotton Inc. research center was focused on fashion, with many colors and styles of cotton fabrics produced as samples for the top fashion houses. In mid-2000, Cotton introduced new woven constructions of cotton materials in six categories. TableWear featured textures for use in tablecloths and napkins; Decorative 1 showcased Bedford cords for upholstery; Decorative 2 introduced a dual-twill weave and Angelina sparkle yarn; Sheers Curtains introduced a fancy mock leno weave; Top-the-Bed collection featured Grecian honeycombs and twills with honeycomb weaves; and the Drapery group introduced dobby weaves, honeycomb weaves and novelty yarns.

After the terrorist attacks on the east coast of the United States in September 2001, Cotton Inc. partnered with Jones Lang LaSalle, a management company of retail malls across the country, to raise money for the families of the tragedy. Called "Share the Spirit," the program offered teddy bears with American flag t-shirts for a minimum donation of $5 and a $50 minimum purchase of cotton products. Proceeds went to The New York Police and Fire Widows' and Children's Benefit Fund.

Clothing made from organic fibers, including cotton and wool, grew by 11 percent from 1996 through 2001. Analysts projected that sales of organically grown fiber clothing would increase 44 percent from 2000 through 2005. The Organic Trade Association (OTA) had long fought to have products made with organic fibers recognized by various government and trade bodies. In June 2000, Cotton Inc. reversed its policy of recognizing only conventionally grown cotton, allowing the use of its Seal of Cotton to be licensed for products sold as organically grown. However, the new criteria from Cotton Inc. maintained that "the prospective licensee must not, either individually or as a part of a collective effort, publicly denigrate, criticize, or otherwise negatively comment about cotton, cotton products, or cotton production systems." The OTA protested, finding that the mandate prohibited them from pointing out what they felt were superior features of organically grown cotton.

Cotton Inc. continued to tailor their approach to advertising and marketing to different cultures. In 2001, 62 percent of women surveyed in the United States said they would rather dress comfortably than fashionably, and 70 percent said they would rather be comfortable than fashionable when they are out shopping. In Europe, especially among older women, fashion ranked higher than comfort. In the same survey, it was found that European and Japanese women preferred to change outfits throughout the day, as events warranted, while women in the United States were more likely to wear one outfit throughout the day. One other important difference in demographics was that women in the United States were more likely to think clothes made from natural fibers were of better quality, whereas women from Japan and Europe did not agree. Cotton Inc. thus had its work cut out for it on foreign soil.

At the end of 2001, Cotton Inc. introduced new commercials, building on the Fabric of Our Lives campaign. The new 30-second spots were part of a $20 million advertising campaign and featured ordinary people dancing in their cotton clothing. Past ad campaigns were targeted towards women ages 18 to 49; this campaign focused on women ages 18 to 34. Moreover, the new commercials focused exclusively on cotton apparel, unlike past campaigns, which also featured lines, bedding, and towels. Cotton Inc. wanted to focus more on younger women, who were still developing their buying habits. Continuing to promote the advantages of cotton, Cotton Inc. was a major advertiser during the Winter Olympics in February 2002.

Principal Competitors: E.I. du Pont de Nemours (DuPont); Celanese AG; Milliken & Company, Inc.

Chronology

• Key Dates:
• 1970: Cotton Incorporated is created to combat loss of market share due to consumers' infatuation with synthetic products.
• 1973: The Seal of Cotton logo is born.
• 1975: Cotton Inc. opens a research dyeing and finishing laboratory for the development of new and improved cotton products.
• 1976: A fiber processing laboratory with state-of-the-art equipment is opened.
• 1982: Cotton Inc. opens two international offices, in Osaka, Japan, and London, England.
• 1987: Company introduces garment wrinkle-resistant finishing.
• 1989: The Fabric of Our Lives television advertising campaign debuts on Thanksgiving Day.
• 1994: Cotton Inc. hosts its first Crop Management Seminar for crop management consultants to discuss pesticides and management techniques.
• 2000: Cotton Inc. opens its new World Headquarters, a 125,000-square-foot research, development and office complex in Cary, North Carolina.