Why Is Patagonia Such a Successful Brand?

As it celebrated its fiftieth birthday in 2023, Patagonia also ranked as the #1 most reputable brand in the USA (American companies with the best and worst reputation). Over the years the company has grown into one of the largest outdoor apparel brands, with over 70 retail stores and regularly generating almost $100 million annual revenue. Quite an incredible feat given its founder Yvon Chouinard’s humble business beginnings hand forging climbing pitons and selling them for $1.50 each.

Chouinard Equipment black and white photo of the team — By 1970, Chouinard Equipment had become the largest supplier of climbing hardware in the United States.

Patagonia, Navigating the Contradiction

What is it about Patagonia that makes it so successful? There have been many articles written here, plus of course various books by the key Patagonia people. There are recurrent themes, such as the irrepressible character of Yvon Chouinard himself, the relentless ambition to build better products, and the brand’s constant but evolving environmental purpose. What fascinates me though is how Patagonia has navigated the contradiction of being a for-profit apparel company on the one hand while sincerely fighting the climate crisis on the other.

The clothing industry is one of the biggest polluters of the planet, so how can a private company that sells large volumes of clothes also be a brand that is known for its environmental credentials? So that’s what I intend to write about here, to give you an understanding of what it takes to build one of the world’s most successful and reputable brands.

If you’re after a detailed history of Patagonia right from the start, who better to tell it than the brand themselves: read the Patagonia company history.

Making the Right Decisions Is Tough

Right from the very start Yvon Chouinard wanted to make better products than anyone else. He was an avid climbing and outdoors enthusiast and, unhappy with the available pitons (spikes used to secure rope on a rock face), in 1957 he set out to make better ones himself. He succeeded - making them stiffer, stronger and better suited for reuse. He carried on innovating.

By 1970 Chouinard Equipment Co was the largest supplier of climbing hardware in America. But his success had helped create a problem (and this wouldn’t be the first time). As climbing grew in popularity, the increased piton usage was leaving lasting damage to the rock face.

His love of nature meant he knew he needed to find an alternative to pitons, yet they represented around 70% of his business. His solution was aluminium chocks that left the rock face unaltered. A tough decision to make, but ultimately the right one. A few years later his chock business had overtaken the piton one.

Always on the lookout for better equipment, he opened a retail store in the early 1970’s selling clothing he’d discovered on his travels abroad that was better than the stuff available at home. Rugby jerseys from Scotland were one of the key products here, as well as being highly durable the high collar prevented neck chafing when carrying ropes.

He was also well aware that the higher margin clothing business could support the lower margin climbing equipment business, which only made around 1% profit. In 1973, this became the brand we know as Patagonia. And the business continued to expand rapidly because it continued to innovate and offer superior practical products.

However, as with the pitons, there soon came a realisation that the production practices of the clothing industry had a negative impact on the environment. This was especially true of cotton production, which used a cocktail of lethal chemicals, including formaldehyde. And so they switched to using only organic cotton.

Patagonia ad from the Friday 25th November 2011 edition of The New York Times (click image to view as a PDF, 1.5MB)

Organic cotton was harder to source and to spin, and so margins shrank and growth slowed. But not for long. This was also the beginning of them as a business seeking to abide by fair trade principles, long before most other companies.

Not only did Patagonia believe in making the best products, they believed in making products that would last, and thus reduce the need to buy more, something many businesses simply couldn’t fathom. They placed sustainable products and the environment above financial success. They encouraged customers to reuse and recycle products, to reduce their consumption (there’s even a van that drives around the USA repairing Patagonia products for free).

They looked at their own environmental impact and tried to improve it, focusing on renewable energy sources and making products from recycled or organic materials (if you own a Patagonia cap, for example, the plastic parts are made from recycled fishing nets). They supported environmental activists, believing they could have more impact when done at a grassroots level. Communities had always been important to them, internally as well as externally. They worked hard to foster a sense of community among their employees, who were encouraged to take surf breaks, wear whatever they wanted and enjoy work flexibility.

In the 1970’s they made their first donation to save the Ventura River and its fish from a development plan. Similar initiatives followed. In 1985 they pledged 10% of company profits to environmental conservation groups. Then later in 2002 Chouinard cofounded “One Percent for the Planet”, whereby 1% of all gross revenue is given to environmental groups, and which is now supported by a variety of other businesses.

The ‘Worn Wear’ programme was introduced in 2013, which allows customers to return certain Patagonia items in exchange for new merchandise credit. These returned items would be cleaned, repaired, and resold on Patagonia’s “Worn Wear” website. Historically on Black Friday Patagonia had closed its stores. But in 2016 they kept them open and donated all their sales from the event, almost $11 million, to environmental causes (which they called “100% for the Planet”). It’s no surprise their slogan is “In business to save our home planet”.

However Patagonia don’t view themselves as a “sustainable” business. They are themselves the first to acknowledge that they are far from perfect. Chouinard himself said:

“We can’t delude ourselves into thinking that anything we or any other business does is 'sustainable'. The best we can do is minimize the harm we do to the planet.”

But they do believe there is such a thing as a responsible company. And so they are constantly trying to figure out how to do things better and continue to make positive environmental change. If you read any of Chouinard’s books, you realise Patagonia’s most important product isn’t a piton or a jacket, it’s an unflinching sense of purpose they’ve stuck to for decades.

Using Capitalism To Save The Planet

In September 2022, Chouinard, then 83 years old, made perhaps his finest move. In typical revolutionary style, he gave away his company, transferring ownership to two trusts working to enhance the planet. Patagonia Purpose Trust now owns all the voting stock and will work to help demonstrate, as a for-profit business, that capitalism can work for the Earth. Meanwhile, the Holdfast Collective owns all the non-voting stock and will use every dollar received from Patagonia to protect nature and biodiversity, support thriving communities and fight the environmental crisis.

Each year, profits that are not reinvested back into the business will be distributed by Patagonia as a dividend to the Holdfast Collective to help fight the climate crisis. The company projects that it will pay out an annual dividend of roughly $100 million, depending on the health of the business. Patagonia will still continue to give one percent of sales each year to grassroots activists.

Chouinard remarked:

“It’s been a half-century since we began our experiment in responsible business. If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have. As the business leader I never wanted to be, I am doing my part. Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source. We’re making Earth our only shareholder. I am dead serious about saving this planet.”

Patagonia Poster - We Stand For The Waters We Stand In

So Why Do People Love Patagonia?

Aside from the quality and range of the products (which covers climbing, trail running, mountain biking, surfing, skiing, snowboarding and fly fishing), people love what Patagonia stands for. It’s a brand with a very strong and vocal purpose, and one that puts its money where its mouth is.

At the bottom of the Patagonia website you’ll find 5 very good reasons for their success:

Alex Weller, Marketing Director Patagonia Europe, believes that:

“In what feels like an increasingly stormy and chaotic world, people are looking for little anchors of hope.”

Patagonia with its focus on sustainable practices, how it approaches doing business in a corporate world, and its grassroots environmental activism, offers people exactly that. And it doesn’t just offer consumers hope, it shows the business world there are better ways of operating too.