In 1870, Ernest Wertheimer, a Jewish businessman, moved from Alsace, France, to Paris during the Franco-Prussian War. Shortly after his arrival he purchased an interest in a French theatrical makeup company called Bourjois. Bourjois successfully introduced dry rouge to the European market in the 1890s. The company grew rapidly, and by the early 1920s, Bourjois had begun making and distributing skin creams from his Rochester, New York, plant for cosmetic industry giant Helena Rubenstien. By the 1920s, Bourjois had become the largest cosmetics and fragrance manufacturer in France.
“In 1921, a clever French businesswoman and belle of the Parisian social elite created a scent that revolutionised the way women smell. Ninety years later Chanel No 5 is arguably still the world’s most iconic perfume.” – www.bbc.com
“Created by Gabrielle Chanel in 1921 to be the ultimate symbol of luxurious simplicity, N°5 has since become more than a fragrance. It is an olfactory heritage: an idea of femininity, a masterpiece of chic, passed on from generation to generation.” – www.chanel.com
“In 1920, when Gabrielle “Coco” Chanel was presented with small glass vials containing sample scent compositions numbered 1 to 5 and 20 to 24 for her assessment, she chose the fifth vial. Chanel told her master perfumer, Ernest Beaux, whom she had commissioned to develop a fragrance with modern innovations: ‘I present my dress collections on the fifth of May, the fifth month of the year and so we will let this sample number five keep the name it has already, it will bring good luck.'” – Wikipedia
Chanel’s initial marketing strategy was to generate buzz around her new fragrance by hosting a promotional event. She invited a group of elite friends to dine with her in an elegant restaurant in Grasse where she surprised and delighted her guests by spraying them with Chanel No. 5. The official launch place and date of Chanel No. 5 was in her rue Cambon boutique in the fifth month of the year, on the fifth day of the month: 5 May 1921. She infused the shop’s dressing rooms with the scent, and she gave bottles to a select few of her high society friends. It was sold only in Chanel boutiques to select clients.
The success of the No. 5 encouraged Coco Chanel to expand perfume sales beyond France and Europe, and to develop other perfumes — for which she required investment capital, business acumen, and access to the North American market. To that end, the businessman Théophile Bader (founder of the Paris department store, Galeries Lafayette) introduced the venture capitalist Pierre Wertheimer to Coco Chanel. Pierre Wertheimer was an an admirer of Coco Chanel and wanted to help her succeed.
In 1924, Chanel made an agreement with the Jewish brothers, Pierre and Paul Wertheimer , directors of the eminent perfume house Bourjois since 1917, creating a corporate entity, “Parfums Chanel.” The Wertheimers agreed to provide full financing for production, marketing and distribution of Chanel No. 5. The Wertheimers would receive a seventy percent share of the company, Théophile Bader would receive twenty percent, and Chanel would have the remaining ten percent but she would have no involvement in the actual running of the business.
Chanel licensed her name to “Parfums Chanel” and removed herself from involvement in all business operations. During the 1920s and 1930s Parfums Chanel thrived. In addition to selling the famous Chanel No. 5 perfume, the company eventually introduced other fragrances. In 1929, Pierre Wertheimer introduced Soir de Paris, a fragrance aimed at the general public and marketed through the Bourjois company. Meanwhile, Coco Chanel operated a successful fashion studio near the Louvre museum in Paris. Under an agreement with the Wertheimers, she operated her design business as a separate company, but sold the clothes under the Chanel name. Although Parfums Chanel and Coco Chanel’s design business flourished, the personal relationship between Coco Chanel and Pierre Wertheimer deteriorated. Coco was displeased with the arrangement. She worked for more than twenty years to gain full control of “Parfums Chanel.” She proclaimed that Pierre Wertheimer was “the bandit who screwed me.”
Coco felt she should have a larger than ten percent portion of the company, and she argued that she had unwittingly signed away the rights to her own name. The Wertheimers countered her grievances with an argument that reminded Coco Chanel that the Wertheimers had funded her venture in the first place, giving her the chance to take her creations to market, and had made her a relatively wealthy woman.
In World War II the Nazi seizure of all Jewish owned property and business enterprises, providing Chanel with the opportunity to gain the full monetary fortune generated by “Parfums Chanel” and its most profitable product, Chanel No. 5. The directors of “Parfums Chanel,” the Wertheimers, were Jewish, and Chanel used her position as an “Aryan” to petition German officials to legalize her right to sole ownership.
In 1939, at the beginning of World War II, Chanel closed her shops, maintaining her apartment situated above the couture house at 31 Rue de Cambon. She claimed that it was not a time for fashion; as a result of her action, 4,000 female employees lost their jobs. In closing her couture house, Chanel made a definitive statement of her political views. Her dislike of Jews, reportedly inculcated by her convent years and sharpened by her association with society elites, had solidified her beliefs. She shared with many of her circle a conviction that Jews were a threat to Europe because of the Bolshevik government in the Soviet Union. During the German occupation, Chanel resided at the Hotel Ritz. It was noteworthy as the preferred place of residence for upper-echelon German military staff. Her romantic liaison with Baron Hans Gunther von Dincklage, a German officer who had been an operative in military intelligence since 1920, eased her arrangements at the Ritz.
On 5 May 1941, Chanel wrote to the government administrator charged with ruling on the disposition of Jewish financial assets. Her grounds for proprietary ownership were based on the claim that “Parfums Chanel” “is still the property of Jews” and had been legally “abandoned” by the owners. Chanel was not aware that the Wertheimers, anticipating the forthcoming Nazi mandates against Jews had, in May 1940, legally turned control of “Parfums Chanel” over to a Christian, French businessman and industrialist Felix Amiot. The Wertheimers had fled from France to New York in 1940. At the end of World War II, Amiot turned “Parfums Chanel” back into the hands of the Wertheimers.
Declassified, archival documents unearthed by biographer Hal Vaughan reveal that Chanel committed herself to the German cause as early as 1941 and worked for General Walter Schellenberg, chief of SS intelligence. At the end of the war, Schellenberg was tried by the Nuremberg Military Tribunal, and sentenced to six years’ imprisonment for war crimes. He was released in 1951 owing to incurable liver disease and took refuge in Italy. Chanel paid for Schellenberg’s medical care and living expenses, financially supported his wife and family, and paid for Schellenberg’s funeral upon his death in 1952.
In September 1944, Chanel was called in to be interrogated by the Free French Purge Committee, the épuration. The committee had no documented evidence of her collaboration activity and was obliged to release her. According to Chanel’s grand-niece, Gabrielle Palasse Labrunie, when Chanel returned home she said, “Churchill had me freed”. After her release, Coco Chanel immediately fled France for Switzerland.
The extent of Churchill’s intervention for Chanel after the war became a subject of gossip and speculation. Some historians claimed that people worried that, if Chanel were forced to testify about her own activities at trial, she would expose the pro-Nazi sympathies and activities of certain top-level British officials, members of the society elite, and the royal family. Vaughan writes that some claim that Churchill instructed Duff Cooper, British ambassador to the French provisional government, to protect Chanel.
In the post–war period, during Coco Chanel’s Swiss exile from France, Pierre Wertheimer returned to Paris, and regained formal administrative control of his family’s business holdings — including control of Parfums Chanel, the parfumerie established with his venture capital, and successful because of the Chanel name.
In Switzerland, the news revived Coco Chanel’s resentment at having been exploited by her business partner, for only ten per cent of the money. So she established a rival Swiss parfumerie to create, produce, and sell her “Chanel perfumes”.
By the mid-1940s, the worldwide sale of Chanel No. 5 amounted to nine million dollars annually; some two hundred forty million dollars a year in twenty-first century valuation. The monetary stakes were high and Chanel was determined to wrest control of “Parfums Chanel” from the Wertheimers. Chanel’s plan was to destroy customer confidence in the brand, tarnish the image, crippling its marketing and distribution. She let it be known that Chanel No. 5 was no longer the original fragrance as created by “Mademoiselle Chanel,” it was no longer being compounded according to her standards and what was now being offered to the public was an inferior product, one she could no longer endorse. Further, Chanel announced she would be making available an authentic Chanel No. 5, to be named “Mademoiselle Chanel No. 5”,offered to a group of select clients.
Chanel possibly was unaware that the Wertheimers had instituted a process whereby the quality of Chanel No. 5 would not be compromised. In America the Wertheimers had recruited H. Gregory Thomas as European emissary for “Parfums Chanel.” Thomas’ mission was to establish the mechanisms required to maintain the quality of the Chanel products, particularly its most profitable fragrance, Chanel No. 5. Thomas worked to ensure that the supply of key components, the oils of jasmine and tuberose, obtained exclusively in the French town of Grasse, remain uninterrupted by warfare. Thomas was later promoted to position as president of Chanel US, a distinction he held for thirty-two years.
Chanel escalated her game plan by instigating a lawsuit against “Parfums Chanel” and the Wertheimers. The legal battle garnered wide publicity. The New York Times reported on 3 June 1946: The Wertheimers were cognizant of Chanel’s far from exemplary social entanglements and conduct during the Nazi occupation.
Wertheimer saw his business interests threatened, and his commercial rights infringed, because he did not possess legally exclusive rights to the Chanel name. Nonetheless, Wertheimer avoided a trademark infringement lawsuit against Coco Chanel, lest it damage the commercial reputation and the artistic credibility of his Chanel-brand parfumerie. Pierre Wertheimer settled his business- and commercial-rights quarrel with Chanel, and, in May 1947, they renegotiated the 1924 contract that had established Parfums Chanel — she was paid $400,000 in cash (wartime profits from the sales of perfume No. 5 de Chanel – an amount equivalent to some nine million dollars in twenty-first century valuation); assigned a 2.0 per cent running royalty from the sales of No. 5 parfumerie; assigned limited commercial rights to sell her “Chanel perfumes” in Switzerland; and granted a perpetual monthly stipend that paid all of her expenses.
In exchange Gabrielle Chanel closed her Swiss parfumerie enterprise, and sold to Parfums Chanel the full rights to the name “Coco Chanel”. The financial benefit to her would be enormous. Her earnings would be in the vicinity of twenty-five million dollars a year, making her at the time one of the richest women in the world. The new arrangement also gave Chanel the freedom to create new scents, which would be independent of “Parfums Chanel,” with the proviso that none would contain the appellation number “5” – she never acted on this opportunity.
At 70 years of age in 1954, Coco Chanel returned to Paris with the intent of restarting her fashion studio. She went to Pierre Wertheimer for advice and money, and he agreed to finance her plan. In return for his help, Wertheimer secured the rights to the Chanel name for all products that bore it, not just perfumes. Once more, Wertheimer’s decision paid off from a business standpoint. Coco Chanel’s fashion lines succeeded in their own right and had the net effect of boosting the perfume’s image. In the late 1950s Wertheimer bought back the 20 percent of the company owned by Bader. Thus, when Coco Chanel died in 1971 at the age of 87, the Wertheimers owned the entire Parfums Chanel operation, including all rights to the Chanel name. Pierre Wertheimer died six years before Coco Chanel passed away.
Pierre Wertheimer’s son, Jacques, took control of the Chanel operation in 1965. The 55-year-old Jacques was perhaps best known for his managment of the family’s racing stables and horse breeding operations; Pierre Wertheimer had established one of the finest racing stables in the world in 1910, and Jacques became a renowned horse breeder. According to some critics, however, he did not direct as much attention on the operation of Chanel.
In 1974, Jacques’s 25-year-old son Alain Wertheimer gained control of the company. While the press suggested that the move to new management involved animosity and family feuds, Chanel management maintained that control was ceded in a friendly and peaceable manner.
Chanel No. 5 was still a global perfume industry leader when Alain Wertheimer took the helm. But, with only four percent of the U.S. market, its dominance was fading. After years of mismanagement, Chanel had become viewed by many Americans as a second-rate fragrance that appealed to out-of-style women. Alain Wertheimer succeeded in turning Chanel around in the United States. He removed the perfume from drug store shelves in an effort to create a greater sense of scarcity and exclusivity. As the number of U.S. outlets carrying Chanel No. 5 plummeted from 18,000 to 12,000, Alain Wertheimer pumped millions into advertising Chanel’s fragrances and cosmetics. His efforts increased profits.
In 1980, Alain Wertheimer stepped up efforts in Chanel’s U.S. fashion operations. Attempts to parlay the Chanel fashion division into a profit center and promotional device for Chanel’s fragrances succeeded. Chanel opened up more than 40 Chanel boutiques worldwide. By the late 1980s those shops sold everything from $200-per-ounce perfume and $225 ballerina slippers to $11,000 dresses and $2,000 leather handbags. Importantly, Alain Wertheimer refused to relinquish control of anything related to the family’s Chanel operations. In fact, Chanel remains one of few companies in the cosmetic and apparel industry that does not license its fragrances, cosmetics, or apparel to other producers or distributors.
As a result of Alain Wertheimer’s efforts, the Chanel’s performance improved significantly. Chanel is one of the largest companies in the global perfume industry. Chanel started its success with the introduction of Chanel No. 5 perfume, which continued to be a top selling perfume. Part of Chanel’s success is its adherence to a conservative, proven image. Chanel designers and marketers are extremely careful to not tamper with the Chanel legend. While other perfumes had changed to follow short term trends, the Chanel fragrance remained classic and unchanged.
Chanel is a privately held company owned by Alain and Gerard Wertheimer (Jewish) , grandsons of Pierre Wertheimer, who was an early business partner of Coco Chanel. Its products cover clothes, fragrances, handbags and watches.The brand is most famous for its “little black dress”, the Chanel No. 5 perfume and the Chanel Suit. Chanel ranks as the most desirable brand among luxury Chinese consumers. – Forbs
According to Forbes, the Chanel company worth on May 2016 was 7.2 Billion dollars
The Chanel company has been under the ownership and management of the Jewish family Wertheimer since 1924. They made it the successful 7.2 Billion dollars company that it is today.Very little is known about Chanel’s owners, who will only speak to the press to further their wine and equestrian interests, but according to The New York Times they live “like Old World aristocrats,” indulging their passions for horse racing, shooting, fine wines and art collecting. They own vineyards in Margaux and Saint-Emillon; horses that have won the French Derby, the Breeders’ Cup and Royal Ascot, and an art collection that includes pieces by Picasso and Matisse.
In 2002 the New York Time Magazine described the owners as very discrete people as follows:
“Yet nothing — nothing — is known about the company’s owners, the Wertheimers, who have held the majority stake in Les Parfums Chanel since its incorporation in 1924. ”We’re a very discreet family, we never talk,’ Gérard Wertheimer, one of the two brothers who run the business, whispered to me before the Chanel couture show in Paris last year. ‘It’s about Coco Chanel. It’s about Karl. It’s about everyone who works and creates at Chanel. It’s not about the Wertheimers.’…
…”For instance, they never reveal sales figures for any of their companies, which are all privately owned. (Women’s Wear Daily estimates that Chanel does over $2 billion in fragrance and fashion sales annually.) When Alain, the chairman of the board of Chanel, and his brother Gérard, the chairman of Chanel S.A. Geneva, the company’s European branch, attend Chanel shows, they drive themselves there in a modest French-made hatchback, slip into the hall unnoticed and sit in the third or fourth row. They rarely, if ever, attend Chanel boutique openings or other Chanel events, they never lend their names to advertising, and they eschew licensing the company name for bedsheets and aerosols. ‘You can make money that way,’ Alain told Wine Spectator some years ago in one of his rare interviews. ”But that’s not the way to run a family business.”’ www.nytimes.com