Very Fancy Chanel Now Owns a Very Fancy Tannery

Illustration for article titled Very Fancy Chanel Now Owns a Very Fancy Tannery

Chanel has purchased a tannery. Specifically, the luxury fashion brand has shelled out an undisclosed amount of money for Bodin-Joyeux, which has been around since 1860 and provides much of the lamb hide that goes into those oh-so-expensive quilted bags.

No, the company was not been inspired by the hipster fad for killing what you eat. It's actually part of a broader move in the fashion business toward locking down necessary supplies. Reuters reports:

The trend toward vertical integration – control from the raw material to the shop shelf – gives luxury brands a competitive advantage, raises barriers to entry and helps them defend the high-quality image they want associated with their products.

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The company's also bought Chanel No.5 suppliers and the couture embroiderer Maison Lesage. Hermes and LVMH have also been on a buying spree that includes both tanneries and, apparently, crocodile farms.

"Bodin-Joyeux are lambskin specialists and we wanted to protect and preserve their know-how," Bruno Pavlovsky, the chairman of the company's fashion business, told Reuters. Not to mention that, as demand grows and meat consumption drops, lamb leather and calf hides are increasingly pricey—up something like 25 to 30 percent over the last three to five years.

It's worth noting that Louis Vuitton is apparently struggling with production of its new, sleeker and more expensive (try $4,000 vs. $2,000 for the old monogrammed stuff), because there's just not enough high-quality leather to go around. Supposedly Bodin-Joyeux will continue supplying other luxury brands, but you've got to figure the corporate parent reserves the right to a bit of line-cutting.

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Image via Aaron Davidson/Getty Images

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DISCUSSION

arischwartz
Ari Schwartz: Dark Lord of the Snark

This kind of vertical integration is not really "new," and companies have been trying this for ages: the keiretsu and chaebol come to mind.

The farther you get from your core competencies and competitive advantage, the less focused you are. Sure, it's nice to have a resource locked down, but you also have to manage new internal resources that are outside of what you're good at. Chanel is not a tannery, and now it has to manage the operations of one. It could be good in the sense that you raise barriers to entry for a competitor, but it could also be a resource cost that reduces per dollar efficiency.

I'm a fan of the lean model, so I'm "eh" about this. I know, I know, armchair quarterbacking, but just my $.02.