Louis Vuitton buys controlling share in high-end crocodile tannery

October 11th, 2011

Image via Vogue.com

Did you look through the show shots from Louis Vuitton Spring 2012 and think to yourself, “Self, there’s a whole boatload of crocodile in this collection, and I’m not just talking about bags?” If you did, Women’s Wear Daily‘s report that LVMH has invested heavily in a family-owned Singaporean crocodile tannery makes so much sense that it’s almost silly.

Indeed, the exotics in Vuitton’s show didn’t stop at bags; it seemed like every other model was wearing a powdery pastel coat or jacket made of yards of the exceptionally pricey skin, the MSRPs of which will surely boggle the mind once they come to retail. If Vuitton (and LVMH’s other leather goods brands, including Celine and Givenchy) intends to continue this uptick in crocodile design, then this investment could be the start of many beautiful accessories to come. Are you a croc customer?

Accessories companies like Louis Vuitton that have an enormous range of price points and enough cultural clout to pull people in who might not otherwise be luxury accessories customers usually make the bulk of their profit in the lower end of their price point, but the acquisition of the controlling share in the Singaporean Heng Long International tannery indicates that the company feels that it has opportunities at the higher end of the price spectrum as well. And they’re probably right; LV’s profits keep expanding, and several of the aforementioned brands that the company owns are having accessories heydays as well.

Perhaps unexpectedly, LVMH’s move toward exotics is particularly savvy in a faltering global economy. While the low-end customers may be feeling the pinch, those who might buy a $30,000 crocodile Speedy are raking in money at pre-crash rates. That’s why Hermes keeps expanding rapidly every quarter; it’s a company whose customers are generally in an economic class that doesn’t feel much of a pinch because of fiscal fluctuations. If I was a gambler, I’d bet that this acquisition is an indication that LVMH is trying to ensure that its brands move into a similar spot, if they aren’t there already.

Not to mention, of course, that vertical integration is good for business when you’re a company the size of LVMH. The more steps in the production process that it can control, the more affect that its decisions and policies can have on not only how much LVMH spends on raw materials, but also on global prices for exotic leathers. The rich just keep getting richer, and Louis Vuitton intends to get richer by supplying them with incredibly expensive leather goods.

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