Sneaker Wars Part 8: Nike, Daughter of Onitsuka Tiger

Blue Ribbon Sports ad marketing Onitsuka Tiger sneakers

It’s the end of 1969. Blue Ribbon Sports (BRS) is selling Tigers well enough that he, the CEO, Phil Knight, decides to finally become a full-time employee of his own company. BRS has had a fruitful relationship with Japanese sneaker manufacturer, Onitsuka Tiger. The shoe that BRS co-founder, Bill Bowerman, designed – The Cortez – became a dominant running shoe in the run-up to the 1972 Munich Olympics, taking advantage of a running and jogging boom in America.

In the last month of the last year of the tumultuous 1960s, Knight makes his annual trip to Kobe, Japan, to meet the founder and head of Onitsuka Tiger, and later the global brand Asics, Kihachiro Onitsuka. They renew their vows by signing a three-year contract, giving Blue Ribbon Sports rights to market Onitsuka Tigers in the United States, with the condition that BRS sells Tigers exclusively.

The problem for BRS – while they enjoyed the success of selling Tiger shoes, they realized that their contract limited their business range to distributorship, and thus created an increasingly uncomfortable level of dependency on a single manufacturer of sneakers.

The problem for Onitsuka – while they were able to breach the huge American market via BRS, they realized that every year they continued to market in the US through this relatively small and inexperienced player, they were likely leaving millions of dollars on the table unless they expanded the number of distributors in the American market.

Onitsuka was apparently hearing from other American shoe distributors that the potential for US growth was huge, so he realized he had to push harder into the international markets, particularly the US. With that understanding, he hired an aggressive international sales director, Shoji Kitami, to realize his “Onitsuka of the World” strategy, according to Kenny Moore, author of the book, Bowerman and the Men of Oregon. So despite the three-year agreement of exclusivity, midway through, Kitami met with as many as 18 other shoe distributors in America.Bill Bowerman and the Boys of Oregon cover

Knight was concerned that Kitami’s actions were going to lead to a contractual dispute, but Kitami viewed the exclusive nature of their agreement as shackles. Acoording to Moore, as discussions between Knight and Kitami became more contentious, Kitami suggested that Onitsuka Tiger and Blue Ribbon Sports form a joint venture, with Onitsuka holding a 51-percent share of the company.

This was a moment of truth. According to Moore, “the choice was between surrendering the company to Onitsuka or making their own shoes.” And when they thought about it, they were liking less and less their submissive role as middle man. Bowerman had designed a successful shoe – the Cortez – that they could not get manufactured by other companies. And ironically, while Kitani was saying that they need to expand the number of distributors in American to sell more shoes, Knight and Bowerman would scratch their heads since Onitsuka was regularly guilty of not manufacturing sneakers fast enough to meet demand. BRS would put in an order and Onitsuka would routinely export fewer shoes than ordered. How were they going to meet the other distributors’ demands if they couldn’t even meet the demands of their sole distributor?

Knight and Bowerman realized they needed to prepare for a break up with Onitsuka. Soliciting the help of a large Japanese trading company – Nissho Iwai – BRS were able to find another shoe manufacturer as well as secure financing for the initial manufacture of new BRS branded shoes, including 6,000 pairs of The Cortez, which Kihachiro Onitsuka believed to be their own design. This was the chance they needed.

As Moore quoted Knight as saying, “we have them right where we want them. Onitsuka is too slow to react to product development ideas we give them. They never ship what we order. And they’d probably yank the distributorship at the end of the contract in 1972 anyway. What we need is a brand we can control, because we have everything else, the shoes, the top runners. This is the best thing that could ever happen to us.”

Original 1971 Swoosh Design Nike

The logo design was set to grace the new sneaker. Barbara Smit claims in her book, Sneaker Wars, that a design student was paid $35 when he presented the “inverted comma” design, which later was dubbed, The Swoosh. Knight wanted to call the new brand, Dimension 6. As the deadline for producing the sneaker boxes approached, they still did not have a brand name, other than Dimension 6. That is until Jeff Johnson, Nike’s first full-time employee, woke up with an image of Greek goddess of victory in his head. So with a little forceful nudging under the gun of a production deadline, Knight reluctantly agreed to the name, Nike. After all, it was a short name, one that easily fit on a shoe box.

So in the winter of 1971, the Nike brand was born.