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Italy’s luxury groups set aside rivalries to keep it local

Italy’s luxury groups set aside rivalries to keep it local

By Elisa Anzolin

MILAN (Reuters) – Italy’s luxury fashion groups, which for decades jealously guarded their independence, have started teaming up to protect their supply chains and the Italian roots of smaller companies, showing a new spirit of collaboration.

Control of the supply chain has become increasingly important for luxury brands, ensuring products get to shops on time and avoiding reputational risks linked to sourcing of raw materials or labour conditions.

Italy’s patchwork of specialist artisan workshops and family-owned labels offer particularly rich pickings for larger companies with the cash to cement relationships through investment.

In this spirit, Prada and fellow Italian fashion brand Ermenegildo Zegna in June acquired a minority stake in knitwear company Luigi Fedeli e Figlio, based in Monza, just north of Milan.

The family-owned company, which has a focus on cashmere and jumpers, was founded in 1934 and is distributed in 13 own-brand boutiques and around 400 multi-brand stores worldwide.

Prada and Zegna had previously invested jointly in Filati Biagioli Modesto S.p.A. in 2021, acquiring a majority stake in one of their suppliers, specialised in the production of cashmere and other luxury yarns.

“We invested in Biagioli to relaunch a company that was in crisis, while for Fedeli it’s a case of helping the company to grow,” Patrizio Bertelli, leading shareholder and chairman of Prada Group, told Reuters.

Bertelli, 77, added that smaller Italian companies have in the last two decades had to juggle the handover from one generation of the family to the next with more complex issues such as expanding in new markets.

“Italian brands have wanted to go it alone for too long, and then suddenly they realise you can’t always go it alone and you start to look around,” he added.


Italy is home to thousands of small manufacturers that cover 50-55% of the global production of luxury clothing and leather goods, consultancy Bain calculates.

“Biagioli and Fedeli are two different examples of caring about ‘made in Italy’ and helping to strengthen the Italian supply chain either directly or indirectly,” said Gildo Zegna, 67, chairman and CEO of Ermenegildo Zegna.

“Bertelli and I want to preserve the ‘made in Italy’ jewels and keep the know-how in the country,” Zegna added.

The Italian groups are facing competition from French luxury giants such as LVMH or Gucci-owner Kering, which have also bought suppliers in Italy over the years, especially in the leather industry.

LVMH announced in May it had taken a majority stake in Nuti Ivo Group, an Italian company that has specialised in making leather products since 1955.

Private equity firms have also sensed an investment opportunity and started combining suppliers into larger entities.

Kering managing director Jean-Francois Palus said the luxury group is increasingly looking to bring production in house.

It’s an issue of traceability but also of quality, sourcing of materials, shorter lead times to produce goods and get them to the market and competition for specialist artisans among brands, he said.


There have also been other examples of Franco-Italian cooperation such as a deal whereby Chanel bought a stake in cashmere yarn company Cariaggi Lanificio in partnership with Brunello Cucinelli.

“Italy has not created a (major) luxury hub, but we have entrepreneurs who have the ability to activate the right relationships at the right time,” said Stefania Lazzaroni, general manager at Italian luxury industry association Altagamma.

“The approach has changed, (it is) much more collaborative – to face more complex challenges,” she said.

Indeed, Prada and Zegna’s decision to invest together was born out of a friendship strengthened by recent hard times.

“We got to know each other better during the COVID pandemic, in a difficult moment for the industry, when we needed to support each other,” Zegna said, adding that a fundamental role was played by the meetings held at industry body Camera Nazionale della Moda.

Roberto Costa, head of Global Luxury Investment Banking for Citigroup, said closer working ties reflected a more confident and outward approach from Italian brands.

“Italian groups are now more managerialised, more organised and also stronger, which makes them more open to thinking together,” he said. But he did not necessarily see big deals in the offing.

“There is a greater ability to talk to each other, but this does not mean that there will necessarily be mergers,” he added.

Zegna and Bertelli now sit together on the board of Fedeli and Biagioli, leaving scope for more investments lower down the supply chain.

“If new opportunities arise we will grab them. Whether we do it together or not remains to be seen,” Zegna said.


(Reporting by Elisa Anzolin, additional reporting by Silvia Aloisi, editing by Keith Weir and Jane Merriman)


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