Italians criticise Bulgari for LVMH merger

In a wave of criticism from the Italian press, Bulgari, the Rome-based jeweller, is seen as having turned its back on its compatriots having sold the pride of Italian luxury to the French, in its merger with LVMH. Mr Trapani, the nephew of the

grandsons of Bulgari’s founder, Sotorio Bulgari, opened up to the FT and had a point to make about why Bulgari, like other famous Italian luxury houses Gucci and Fendi before, ended up as part of a large French group made up of multiple brands, rather than remaining independent and Italian.

“For a period of time I have been trying to push my Italian colleagues to try to create something together to face the global market with a stronger organisation, but they never listened to me,” Mr Trapani says.

“People are very jealous and they prefer to have full control of a smaller thing rather than to participate with a lesser degree of control in a larger venture.”

Senior bankers talk privately of having tried for several years to get Italian luxury goods entrepreneurs, such as Prada’s Patrizio Bertelli or Giorgio Armani, in the room together to discuss the possibility of collecting their brands under one banner so they can use the scale to reduce the costs of media buying or distribution, as LVMH and PPR of France and Switzerland’s Richemont have done.

This “provincialism”, as Mr Trapani calls it, has arguably created an unparalleled entrepreneurial culture in Italy.

Mr Bertelli once told the Financial Times he derived his drive from the fact that he was from Arezzo, a small town in Tuscany, and he always wanted to be better than the person up the road in Florence. But in a globalised world, the relatively small scale of many Italian companies – with a few exceptions such as Ferrero, the chocolate maker, and Barilla, which makes pasta – is proving a problem that is shared by Italian industry at large.

Mr Trapani points to the changes to the luxury goods industry in the 30 years since Italian designer entrepreneurs, like Giorgio Armani, Valentino Garavani and the Bulgari brothers, Nicola and Paolo, were embraced by consumers around the world.

Many independent luxury goods companies teetered on the brink of collapse after the September 11 attacks in 2001, the Sars outbreak in 2003 and the financial crisis. And such macroeconomic volatility, coupled with the effects of globalisation, has meant that scale in distribution and financial muscle have become as important as creativity.

Mr Trapani says: “The risk to independent brands is that if they do not have revenues of around €3bn [$4bn], they will probably lose market share.” This is because it is too difficult to compete with companies such as LVMH.

In the deal with LVMH, Bugari’s equity was valued at €3.7bn and Mr Trapani became head of the watches and jewellery division of LVMH, which doubles in size as a result of the deal.

Source: FT©
Image: Bulgari