It's not enough that the storied Ermenegildo Zegna Group is the sixth largest luxury company in Italy - thanks to its sales of upscale men's suits. Its latest accolade is, however, a little less sexy-sounding: The 104-year-old house is now an official wool grower. Earlier this month, the menswear heavyweight announced the acquisition of a majority stake in an Australian superfine wool farm Achill, where merino wool sheep are raised.
"The opportunity to better understand the daily work of the graziers, sharing the culture and the philosophy of quality and the technical side of this magnificent fibre is quite exciting," explains Paolo Zegna, chairman of the Ermenegildo Zegna Group. "By supporting the work of a young, talented farmer, we have a unique and sizeable opportunity to faithfully look at the future of an industry which we want to preserve and protect for future generations."
Today, the Zegna Group treats and consumes 1.5 million kg per year of the highest grade wool available. With over 500 standalone boutiques around the world, the fourth-generation family business also produces suits for brands such as Gucci and Tom Ford, and is one of the biggest producers of luxury fabrics in the world. To maintain its demand for ultra-fine wool fabrics, company reps explored the idea of being in the business of producing the raw material during a trip to Sydney. Inking the deal with the family-owned wool farming company then officially completed the brand's supply chain.
"Since luxury brands compete on the basis of heritage, craftsmanship, and authenticity, with the rapid global expansion of the big players like Gucci and Louis Vuitton, high quality raw material becomes relatively scarce," says Qing Wang, professor of marketing and innovation at Warwick Business School. "Ensuring their availability becomes a critical condition and strategic consideration for business success."
Pinning down the palette of the season or securing prime retail real estate are miniscule cogs in the massive wheel that drives the revenue streams of big brands. Vertical integration - whereby Zegna, for example, is now fully involved in the entire value chain from the production of wool up to selling products to the final consumer, is now essential for the bigwigs of fashion to keep abreast of the competition.
Last year, Loro Piana, the LVMH-owned Italian purveyor of swank cashmere and wool products, bought a controlling stake in an Argentinean firm that has the rights to shear the wild vicunas (smaller-sized llamas) in the Catamarca province to produce the prized, ultra-silky fibre. And it's a worthy investment for a company regarded as a rival to Zegna, as coats spun from the rare, gossamer-light hairs of the animal could fetch over US$20,000 due to the limited number of herds.