Luxury brands race to secure their supply lines
FROM crocodile farms to rose fields, suppliers of luxury material have become top acquisition targets for names like LVMH and Gucci owner Kering as they race to lock in rare skills and ingredients vital to their brands’ survival.
Having invested heavily in recent years to open shops around the world, notably in emerging markets, luxury leaders are now competing to control the supply lines.
Illustrating that thinking is LVMH’s deal last month to pay à2- billion (about R27-billion) for 80% of Italy’s Loro Piana, one of the world’s top cashmere makers, which herds its own Andean llamalike vicunas, prized for their fine, tawny hair.
With one Loro Piana overcoat requiring the fleeces of 25-30 animals and retailing for about à14 000 in Milan, that’s a precious resource to own.
Meanwhile, in the watch industry, Cartier owner Richemont and Kering, among others, have been stepping up their investments in parts providers.
The latest acquisitions add to luxury’s trend towards vertical integration — controlling everything from the cutting room up to the shop rail.
In 2011, LVMH spent à60million to buy watch dial maker ArteCad and another à47million for 51% of Singaporebased Heng Long, a crocodile leather tannery.
In the cosmetics world, Dior, Chanel and Hermes have been forging partnerships with plant growers to guarantee supplies.
Dior has struck deals with farmers in Switzerland and Africa to ensure supplies of ingredients vital to new perfumes and creams. It has also bought land near Grasse, France’s perfume capital with thousands of acres of flower farming, to grow its own jasmine and roses.
Chanel, which also grows jasmine and roses near Grasse for its No.5 perfume, is so concerned with preserving the quality of its materials that it has built extraction machines in the middle of the fields to avoid the flowers being bruised in transport.
The trend to secure materials stretches to clothing too: Chanel bought Scottish cashmere maker Barrie Knitwear last year and also owns embroiderer Lesage and feather specialist Lemari.
Handbag maker Hermes has bought up live supplies — it now owns an alligator farm in Louisiana and two crocodile farms in Australia.
A high-grade crocodile skin can cost several thousand euros and it takes belly skin from three porosus crocodiles — the most sought-after because of their regular scales — to make one Hermes Kelly bag, originally designed for 1950s actress Grace Kelly and still loved by celebrities. The bags fetch around à30 000 each at Hermes’ Paris shops.
Industry sources say that Kering, formerly known as PPR, may invest in python farms after acquiring exotic skin tannery France Croco earlier this year. —