Toni Belloni of LVMH says group mulling creation of a Louis Vuitton know-how centre in Italy
Toni Belloni was close-mouthed about the imminent launch of a new, LVMH-backed label by Phoebe Philo, but the managing director of the world’s number one luxury group was much more talkative about the group’s priorities and key ongoing projects. At the ‘Show Me’ event staged on November 19 in Florence to promote the fine craftsmanship professions active within the French luxury giant's labels, Belloni spoke to a handful of journalists, including FashionNetwork.com, notably explaining how suppliers have become increasingly significant partners for LVMH, and underlining the key role played by the group’s manufacturing and supply chain.
Caught between the need to ensure their supply chain is increasingly environmentally friendly, and the necessity to preserve their know-how, top luxury players are seeking to take greater control over their production process. Some groups have acquired the most specialised manufacturers that produce for them. Other market players are pooling together various SMEs in order to create top-notch manufacturing hubs. LVMH is focusing its attention on a select number of priority suppliers, acquiring stakes in some companies when needed.
“In our policy of forging close connections with suppliers, we favour long-term relationships. In some cases, when there are generational change issues, the heirs are no longer keen to pursue the activities of their parents. Alternatively, when there is limited access to specific know-how, we sometimes happen to take an interest in certain companies through deals that aren’t only commercial but also capital-based,” said Belloni. “We have indeed bought factories. But we mostly like to keep the original entrepreneurs in place where possible, because they have a know-how, a heritage, that is a little different from what we do internally. They have skills in which we greatly believe, that we try to tap by letting the original entrepreneurs retain control, while supporting them with a longer-term contract and a degree of access to the global market,” he added.
LVMH strongly believes in this kind of partnership and in its contractors’ ability to be highly responsive, as well as in their expertise. “In addition to the capacity for high-quality manufacturing our suppliers have, there is real added value in terms of creativity and ideas, which stems from these companies and constitutes a major source of innovation for the entire luxury industry,” underlined Belloni. He illustrated his point by referring to the Masoni tannery in Tuscany: “We have reached an agreement to buy a stake in the company. Thanks to the visibility that we are giving Mr Masoni through our orders, he is planning to open a new factory next year. This does not represent a change in strategy with regards to our manufacturing ecosystem, but is an approach that we are adapting to new needs.”
The other strategic axis for LVMH consists in building new factories from scratch. In September 2022, the group will inaugurate in Bagno a Ripoli, near Florence, a new manufacturing and product development facility specialised in leather goods for Fendi, which is said to be called Fabbrica. It is located in an area that was once home to the Brunelleschi blast furnace, and where the group is building a 12,000 m2 eco-factory almost entirely covered with vegetation, designed by Milanese architecture studio Piuarch. The factory will initially employ nearly 250 people, growing to 400-500 at full capacity and supplementing the output of Fendi’s other Tuscan factory, located in Ponte a Ema.
Another project concerns Thélios, the eyewear producer set up by LVMH in partnership with Marcolin. Thélios opened in 2018 in Longarone, in the northern Italian eyewear district of Belluno. Since then, Thélios has acquired a second site and it is now planning, “although not immediately, to build a third unit which will incorporate new production facilities.”
Finally, the group is thinking about building a Louis Vuitton facility in Italy. “The label already has a fantastic footwear production plant in Veneto, and factories that produce accessories scattered across Lombardy. There is a project for creating a know-how centre, effectively bringing together a number of artisanal trades that are currently exploiting Italian expertise, in a facility that will probably be located in Tuscany. This new factory, if we were to go ahead with it, will be totally dedicated to Louis Vuitton,” said Belloni, who also confirmed that LVMH intends to continue to invest heavily in Italy: “Our volumes are growing so much. We will certainly invest €100 million in Italy in 2022, and we may go beyond that.”
As for the issue of rising raw material prices, Belloni did not seem to be concerned, though he acknowledged that the group “is having some sourcing difficulties in certain product categories.” “For example, at Sephora, we are having trouble filling certain shelves, especially in the case of brands that have very long supply chains, with suppliers in distant countries. There might also be transportation and port access issues. But I don't think these will last for more than a few months. We shall see,” he said, indicating that the problem “is linked, on the one hand, to structural inflation and, on the other, to the post-pandemic recovery, with its inevitable short-term bottlenecks.”
Among LVMH’s ongoing projects, Belloni mentioned the relaunch of Emilio Pucci, with the arrival in September of new Creative Director Camille Miceli: “We are going through an incubation period. The idea is to give [Pucci] more of a resort vibe, because we think that is where its strength lies. If products and brand are correctly positioned and attractive, then the business works. This is the way we think. We are extremely focused on finding a design philosophy for the label and a [market] space where it will manage to be successful with customers, of course with the kind of budgets that are appropriate to its size.”
Finally, Belloni was cagey about possible new acquisitions by LVMH. “Tiffany is a major acquisition that we need to metabolise and promote. In addition, the business of all our houses keeps growing. There is much to do. Our core strategy is based on organic growth in the expansion and promotion of our assets and companies,” said Belloni, who concluded by stating that “there is nothing happening in the market without us being interested and taking a peek.”
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