Milan – In these turbulent times, Italian entrepreneurs are pursuing their North Star, increasingly turning to what they trust will provide a competitive advantage – namely, strengthening their companies’ manufacturing pipeline and supply chain.
There is no reason to wonder if this will continue into 2022, as rising prices, raw material scarcity, shipping issues and political tensions affect companies’ bottom line and stock.
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Zegna’s first trading day in New York on December 20 was certainly news enough in and of itself, but Chairman and CEO Gildo Zegna has been repeatedly asked about potential acquisitions, given the additional financial strength the public listing provides. The response was again Zegna’s renewed interest in continuing to build the company’s Made in Italy platform. He added, “I am a firm believer that nothing in the world can compare to Italian craftsmanship and quality, and our goal is to create and access the very best in fabrics, textiles and other materials through our platform.” “We need a scale.”
Last summer, Patrizio Bertelli, CEO of Zegna and Prada, made headlines with what was certainly a major new partnership between two of Italy’s most respected companies, which could pave the way for more of the same in the industry.
As reported, Zegna and Prada joined forces to acquire a majority stake in cashmere company Filati Biagioli Modesto SpA, Bertelli said at the time: “We need more skills and to be stronger. There is no doubt that the luxury market will grow.” It is evolving as we adapt our industry organizations to provide more services.”
Both Zegna and Prada over the years have built impressive production platforms, but their leaders know that there is more needs to be done in such a competitive segment and respond to the needs of even more intelligent and demanding customers.
Pipeline protection is also a factor in these deals by injecting new capital into small and medium-sized businesses that can sometimes struggle to be competitive, preserving the unique skills of the craftsmen who have contributed to the success of the Made in Italy brand and support the transition to More sustainable practices, which will be increasingly essential.
Claudia Darbizio, partner at Bain & Co. In Milan: “We see the integration of different companies and M&A activities as a positive and encouraging sign.” “It helps companies develop and acquire management structures, which are essential to meet current and future challenges.”
One example is Gruppo Florence, the luxury production mogul set up in 2020 by industry veteran Francesco Trapani through private equity fund VAM Investments together with Fondo Italiano d’Investimento and Italmobiliare. Its goal is to provide high quality “Made in Italy” products to major luxury fashion brands through the acquisition of Italian family-owned and small and medium-sized businesses. However, Trapani believes that it is essential that Florence depend on the founders and leaders of these companies to survive, maintaining their technical and cultural knowledge but helping them ensure fast, flexible delivery and solutions.
Trapani is eyeing additional acquisitions after taking stakes in companies ranging from jersey specialist Manifatture Cesari to outerwear maker Giuntini and knitwear company Mely’s. These companies are all so strong and technologically advanced, Trapani said, “are beginning to realize that it is good to be part of a larger group,” whose small and medium size can be a risk to established and large brands that Florence works with and need to feel safe, As the executive says, warning of the potential for suppliers to be fragmented.
Certainly, luxury brands rely on the Italian manufacturing pipeline, which covers all product categories and production steps, and the level of service they demand is becoming increasingly more complex, leading to the need for a more structured organization.
Mauro Grange, partner in the Made in Italy fund, which is run by Quadrivio and Pambianco and invests in wine, food, beauty, fashion and furniture, believes that entrepreneurs are now more open to investors because they want to be helped to respond to these demands and not just sell their companies. The fund, which has invested in companies ranging from Dondup and GCDS to Ghoud and Autry, operates with a long-term perspective. Its goal is to preserve the brand and work with its owners. Former Gucci and Golden Goose Chairman Patrizio DiMarco also became an investor in a Made in Italy fund and was appointed president of Ghoud and Autry.
Grange believes the fund can help by “providing insight and support for making bold decisions.” [that the founders of a company] They probably won’t make on their own. Oftentimes they need to see things from a different perspective and we provide an outside point of view.”
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